Illinois PIRG: State Farm's influence blocks regulators' probe

Takeaways:

• Regulator sought property insurance data multiple times
• State Farm recently increased Illinois property insurance rates 27%
• State Farm says it has already provided data to justify rate increase
• PIRG says regulator has a right to property market data

The Illinois lawsuit against State Farm seeking property insurance market data, filed October 10, comes after the state's insurance regulator made repeated requests for the information.

The Illinois Department of Insurance (DOI) lacks the enforcement power that other states' regulators have, according to Abe Scarr, program director for energy and utilities at the Illinois Public Interest Research Group (PIRG). 

"Part of regulators doing their job is not just to take the insurers word for it, but to have a better understanding of their business practices and their business practices related to how they're dealing with extreme weather," Scarr said. "It's well within the department's rights and responsibilities to request this type of information."

Last year, the National Association of Insurance Commissioners collected property insurance market data nationwide, but did not release it publicly or to advocacy groups. In September, the Consumer Federation of America asked NAIC to also collect data on property insurance coverage of last resort, and again sought release of collected data.

As detailed in the suit filed by the state's attorney general in Cook County Circuit Court, Illinois DOI first asked State Farm for data from 2018 to 2022 on November 18. The insurer responded that this would violate confidentiality and said the data could not be shared with NAIC. After DOI assured confidentiality, State Farm responded on November 27 that this assurance was not enough. On December 16, DOI requested the data again and State Farm again refused. 

State Farm issued a 27% rate increase in Illinois in July, which was not subject to DOI approval, as it would be in other states, such as California.

On August 12, DOI asked State Farm again for the data, to also cover through 2024, and State Farm again refused.

State Farm responded to the suit with a detailed statement, including noting that its rate increase filing included detailed actuary information justifying the increase, which was shared with NAIC. The statement adds that the insurer has given the regulator "all the data necessary to support its Illinois insurance rates."

In a request for comment, State Farm replied with the aforementioned statement, which also stated, "State Farm 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."

DOI is seeking the property insurance market data in part to determine the impact of extreme weather on the market, according to Scarr of Illinois PIRG.

"Here in Illinois, we get a lot of extreme wind and hail storms that are causing a lot of damage. Everybody's familiar with hurricanes and wildfires, but a lot of catastrophic damage actually comes from these wind and hail storms," he said. "It is impacting Illinois already, and we should expect it to continue."

On June 18, the National Weather Service recorded tornadoes in Central Illinois. From August 16 to 19, Cook County, which includes Chicago and is the most populated in the state, severe rainfall and flooding led to a disaster declaration. 

In July, Illinois governor JB Pritzker criticized State Farm's rate increase and called for the state legislature to act on regulation of insurance rate increases. The state's legislative leaders, Senate president Don Harmon and House speaker Emanuel Welch, did not respond to requests for comment.

Illinois DOI declined comment on pending litigation matters.

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State Farm sued by Illinois amid probe of homeowner premiums