Allstate Plans Significant Rate Increase for Illinois Homeowners
Homeowners in Illinois who are insured with Allstate might soon experience a significant increase in their insurance premiums. The company has announced plans to raise rates by over 14% for many of its policyholders in the region, a change expected to take effect by the end of February.
While this increase may cause concern, Allstate representatives have clarified that it is not directly linked to the wildfires in California, which have dominated headlines due to their devastating impacts and subsequent insurance claims. Instead, the rise in premiums is attributed to the growing number of extreme weather events that have been driving up insurance costs.
Experts highlight that the insurance industry has been acutely aware of the implications of climate change for over a decade, and the recent price hike may just be a precursor to further adjustments. Amy Bach from United Policyholders, a nonprofit focused on insurance consumer education, remarked, “Insurance companies have been all over climate change now for well over a decade. That is really, it is the price tag of climate change.”
Bach also pointed out that insurers are strategizing on maintaining profitability amidst climate challenges by raising rates, reducing coverage, and limiting the number of homes insured in vulnerable areas. She advised homeowners to keep thorough inventories of their possessions and consider shopping around for better insurance deals if rates rise.
Factors Influencing Insurance Rates
The anticipated rate increase by Allstate will not affect all Illinois customers uniformly, though specifics on who will be impacted remain undisclosed. Insurance Information Institute spokesperson Mark Friedlander explains that state-specific regulations and various risk factors determine insurance rates, including building and labor costs, and legal expenses.
Friedlander noted that while catastrophic events like California’s wildfires won’t influence Illinois rates, local severe weather incidents, such as the more than 100 confirmed tornadoes in Illinois in 2024, significantly affect insurance costs.
Wider Implications of Climate Change
The issue of rising insurance rates is not confined to Illinois or California. Nationwide, climate change is reshaping the insurance landscape. U.S. Sen. Sheldon Whitehouse (D-Rhode Island) has recently spotlighted the broader economic repercussions of climate change, citing “climate-flation” as a factor that is increasing costs for families, including insurance premiums.
Whitehouse emphasized in a December news release that climate change poses a risk to homeowners’ insurance accessibility, which could, in turn, impact mortgage availability and property values in climate-vulnerable communities.
The senator’s report suggests a correlation between climate change and the rising premiums and non-renewal rates for insurance policies, underscoring the urgent need for addressing climate-related challenges across the country.
Original Story at www.cbsnews.com