Editorial: Gov. Pritzker and State Farm should stop throwing rhetorical bombs at each other and start negotiating

Chicago Tribune

16-07-2025

The governor of Illinois and one of the state's biggest employers are engaged in an unusually heated war of words.
Shortly after news dropped last week of State Farm's eye-watering 27% average rate hike on Illinois homeowners insurance customers, Gov. JB Pritzker erupted, accusing the Bloomington-based insurance giant of pulling a fast one. 'These increases are predicated on catastrophe numbers that are entirely inconsistent with the Illinois Department of Insurance's own analysis — indicating that State Farm is shifting out-of-state costs onto the homeowners of this state,' Pritzker said in a statement. 'Hard working Illinoisans should not be paying more to protect beach houses in Florida.'
In the insurance world, those are fighting words.
State Farm responded with its own statement saying Pritzker had his facts wrong, and that the insurer's rate hike — as shocking as it was — reflected only its experience in Illinois, where hail and wind storms, combined with higher replacement costs, have made its homeowners business here deeply unprofitable. 'Illinois families deserve an honest conversation about insurance economics rather than political rhetoric.'
So what we appear to have now are two powerful forces facing off, each effectively accusing the other of being a liar. Not ideal, to say the least.
We understand the governor's frustration. The 27% increase, set to take effect Aug. 15, is the largest such one-time hike in memory in Illinois, and State Farm isn't just any old provider. The largest insurer of homes and cars in the land, State Farm is particularly dominant in its home state. For years, it's insured roughly 1 of every 3 Illinois homes.
So when State Farm raises annual premiums by hundreds of dollars in one fell swoop, that could well have a negative impact on the state's economy. State Farm is that big of a player. Consumers already are struggling with inflation of all sorts. Insurance — like utility bills, which also are rising sharply this summer — isn't an avoidable cost. When insurance costs rise this much, many consumers have to tighten other parts of their budgets, which hurts businesses whose products are more discretionary.
That's not to say, though, that we approve of the governor lobbing such serious accusations at State Farm without simultaneously releasing to the public the evidence backing up the rhetoric. Pritzker referenced a Department of Insurance analysis supporting his allegation. So far, no one has seen that analysis despite journalists' request for it.
Likewise, the reference to 'beach houses in Florida' appears to be something of a cheap shot. In 2023, State Farm's homeowners premiums in Florida were two-thirds of its total premiums in Illinois, according to National Association of Insurance Commissioners data. State Farm's homeowners premiums in Texas were 73% more than in Illinois; they were 55% higher in California. Maybe 'cattle ranches in Texas' don't have the same ring as 'beach houses in Florida?'
That stated, State Farm executives had to anticipate that a rate hike of this magnitude would provoke a political backlash. While homeowners have seen their insurance bills rise in recent years, whether they use State Farm or another carrier, few could have expected sticker shock at this level, particularly since Illinois doesn't have the same reputation for weather catastrophes as Florida, Texas or California.
In California, where devastating wildfires have been coupled with major insurers' pulling back on doing business in catastrophe-prone areas, State Farm moved to raise homeowners premiums by 30% on average. A judge earlier this year agreed to allow State Farm to raise rates by 17%, and the company intends to seek the full 30% increase that it originally sought through continued negotiations with the state's insurance commissioner.
That sort of compromise seems to us a reasonable solution to the standoff in Illinois. State Farm could obtain part of its planned increase — say, 15% — and then potentially impose the remainder if its Illinois results don't improve over the coming year.
In return, Pritzker might soften his request for state legislation giving our insurance regulators approval authority over future rate hikes, a power they don't have now, which makes Illinois' insurance industry one of the most lightly regulated in the country.
These are simply suggestions. There are other avenues to compromise. The point is that State Farm and Pritzker need each other.
State Farm is one of Illinois' largest employers and a critical corporate citizen. Its future in Bloomington, a city whose economy is heavily dependent on State Farm, has been the subject of steady rumors over the past decade as the insurer has expanded operations in Texas.
Conversely, Illinois' insurance department is the company's primary regulator. Part of the reason Illinois is home to two of the largest insurers in the U.S. (Allstate being the other) is that it's perceived as a good place to be based. Unlike, say, banking, insurance is regulated state by state; a company's home state takes the lead on ensuring it is operated soundly. A decent relationship between the company and state government is consequently essential.
Even when conditions get this stormy, cooler heads need to prevail.