Allstate homeowners rate hike sparks debate over Illinois insurance oversight

By Catrina Barker | The Center Square contributor
The Center Square

(The Center Square) – Illinois homeowners could see their insurance bills rise again after Allstate filed a $58 million rate increase affecting nearly 300,000 policyholders, reigniting a debate over whether the state should tighten oversight or risk government overreach in the insurance market.

The increase, set to take effect Feb. 24, 2026, follows more than $100 million in Allstate homeowners rate hikes last year. Consumer advocates, including Illinois Public Interest Research Group Director Abe Scarr, say it highlights the lack of meaningful rate review in Illinois, while industry groups warn tighter regulation could reduce competition or drive insurers out of the state.

“We want to get basic language into the Illinois Insurance Code saying that rates shall not be excessive, inadequate or unduly discriminatory,” said Scarr.

According to the PIRG, the Allstate increase averages roughly 8 to 9%, with some policyholders seeing hikes exceeding 10%.

Kevin Martin, executive director of the Illinois Insurance Association, explained rising premiums reflect higher weather-related claim costs, not weak oversight, and argued Illinois’ long-standing “use-and-file” system has helped keep premiums lower than in other large states.

“Illinois homeowners pay on average $200 to $300 less per year than consumers in states like California or New York,” Martin said. “That’s because we’ve maintained an open, competitive marketplace.”

Illinois lawmakers debated insurance rate review legislation during the fall veto session that would have given the Illinois Department of Insurance more authority to review and potentially reject homeowners insurance rate hikes. The bill passed the Senate but failed in the House.

Scarr said his organization supported rate review but believed the legislation was flawed because it did not require the department to review all rate hikes or apply to auto insurance as well.

Martin said insurers have faced sustained losses in recent years due to increased tornado activity, hailstorms and wind damage. Illinois led the nation in the number of tornadoes in 2023, according to industry data cited by the association.

“For eight of the last 10 years, many companies paid out more in claims than they took in through premiums,” Martin said. “Rate increases aren’t profit being put in pockets, they go into reserves so companies can pay claims when disasters happen.”

Consumer advocates have pointed to Allstate’s strong financial performance, noting the company reported $3.7 billion in profit in the third quarter of 2025.

Martin said insurance markets are cyclical, with periods of higher premiums often followed by softer markets and rate reductions.

“What happens if regulation becomes too restrictive is fewer companies want to do business in the state,” he said. “Less competition ultimately means higher costs and fewer choices for consumers.”

Martin noted that insurers must submit detailed actuarial documentation for every rate increase, which the department can review and challenge if it deems rates unjustified.

“There is a review process,” Martin said. “The department can look at rates and determine whether they’re actuarially sound. It’s misleading to suggest insurers can just raise rates without oversight.”

Debate is set to resume in Springfield this spring, with consumer groups pushing for stronger protections and industry warning that strict rules could mirror California’s issues.