State Farm is planning to increase auto insurance rates in Illinois for the second time in 2023, with an average hike of 6% to take effect on June 5. Just five weeks ago, the company implemented a 6.5% increase in the state. The new rates are expected to add approximately $65 annually to the average policy, in addition to the extra $58 per year brought by the previous rate hike. The total expected increase will be $114 on average.
The company cited inflationary pressures, supply chain issues, and higher claim costs as the reasons behind the hikes. The rate hikes are part of the company's efforts to ensure pricing matches risk, according to State Farm spokeswoman Gina Morss-Fischer.
State Farm, which is not subject to shareholder pressures as a mutual insurer, suffered a net loss of $6.7 billion in 2022, the most unprofitable year to date. The loss includes claims payments and reserves adjustments, which exceeded what was collected in premiums. State Farm has been slower to respond to claims inflation compared to its competitors like Allstate.
The company did join its rivals in cutting back on advertising in 2022, spending about $1.01 billion compared to $1.07 billion in 2021 and its five-year peak of $1.21 billion in 2019. Among the county’s biggest personal lines P&C insurers, Progressive was the biggest advertising spender in 2022, logging $1.73 billion in total ad expenses, while GEICO was the one to decrease its ad spend the most.
Photo Credit: State Farm
Categories: Illinois, Business