Illinois AG files suit against State Farm for refusing to give requested information
Illinois Attorney General Kwame Raoul has filed a lawsuit against State Farm Fire and Casualty Insurance Co., State Farm Automobile Insurance, State Farm General Insurance Co., and Oglesby Reinsurance Co. alleging State Farm has refused to comply with a regulatory examination into its nationwide homeowners insurance business.
The suit was filed on behalf of Illinois Department of Insurance (IDOI) Director Ann Gillespie following an examination the department launched in 2024.
The examination was launched to investigate the insurance company’s homeowners insurance policies and premiums. A release notes that State Farm is the largest homeowners insurer in the country and its premiums have risen drastically in recent years.
“In violation of the Illinois Insurance Code, State Farm has refused to provide the data,” the release says. “Attorney General Raoul, on behalf of the department’s director, is asking the court to order State Farm to comply with the examination and provide important information for assessing the challenges that plague the homeowners insurance market for Illinoisians and all Americans.”
The release says that since State Farm is based in Bloomington Illinois, the IDOI has primary oversight nationwide. Its investigation seeks zip-code level nationwide data about State Farm’s homeowners policies, including total premiums collected by the company, types of policy coverage, insurance limits, and the number of claims against those policies.
“State Farm’s obstruction does not just violate the law,” Raoul says in the release. “It prevents the Department of Insurance from obtaining information to help make sure all Illinois homeowners are being treated fairly. State insurance departments are the primary regulators of insurance companies, so it is crucially important that State Farm, headquartered in Illinois, cooperate with the department’s oversight of its business practices.”
The IDOI examines the business records of all insurance entities operating in Illinois, the release says, adding that this includes those with headquarters located in the state.
State Farm has responded by saying the company complies with all applicable laws and remains committed to working with Illinois regulators.
“This Illinois taxpayer funded lawsuit is without merit and unrelated to State Farm’s Illinois rates or our Illinois customers,” a press release says. “State Farm has provided the Illinois Department of Insurance all data necessary to support its Illinois insurance rates.”
State Farm claims to have made a rate filing in June that included a 32-page document detailing actuarial analysis for the rate filing. It then submitted a response to qusetions from the Department.
“No additional questions were received and the filing was closed out by the Department of Insurance on June 27,” the release says.
The insurance company says it first learned about concerns regarding the rate filing from a press release made by Illinois Gov. JB Pritzker.
He called for changes in legislation after State Farm hiked homeowners insurance by 27.2% in July.
“State Farm has provided the same type of information as other insurers provide in supporting rate filings in Illinois,” State Farm’s release says. “Over the last three years, many insurers have raised Homeowners rates, citing deteriorating loss trends in Illinois; several of those increases in total exceed the State Farm increase.”
State Farm, which says it has retained counsel, claims the IDOI’s March demand for nationwide data exceeds the legal authority of the Department. It claims this is the reasons why the company has not provided data.
Illinois is the only state without an insurance rate review process.
The Chicago Tribune says it’s likely that an amended bill filed in January by Sen. Michael Hastings is the “starting point for any debate on the issue.” The legislation would establish a rate review process for auto and homeowner insurance.
The bill, SB0268, says its purpose is to limit unjustified increases in homeowners and automobile insurance premiums, ensure transparency in rate-setting practices, and grant the Department of Insurance greater oversight authority to protect consumers.
A recent Chicago Tribune opinion piece written by Abraham Scarr, state director of the Illinois PIRG, examines the cost of home and auto insurance.
“Given the importance of insurance to our financial security, most states give regulators the power to reject or modify home and auto insurance rate hikes,” Scarr wrote in the piece. “But not in Illinois. Here, insurance companies can raise home and auto insurance prices whenever they want, by however much they want — and regulators have no authority to stop or change those rate hikes. In fact, Illinois is the only state in the entire country where it is legal to charge excessive home and auto insurance rates.”
Scarr said that despite efforts from leaders in the state, change won’t be easy in the state.
“The insurance industry is working to block or water down the proposed reforms,” Scarr says.
It is critical that elected representatives in Springfield enact policies that meet the moment and prioritize consumers getting insurance worth their payments, he writes
“While homeowners’ rates are in focus right now, legislators should not forget that insurers overcharged Illinois drivers to make windfalls during the pandemic, followed by two years of billion-dollar-plus car insurance rate hikes,” the piece says.
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