SPRINGFIELD — Gov. JB Pritzker says he looks forward to signing a pair of bills that cleared the Illinois House on Wednesday giving the state Insurance Department authority to regulate premiums charged for automobile and homeowners insurance.

“Too many families have dealt with unexplained, unfair insurance price hikes on their homes and cars, so this legislation helps protect consumers while maintaining the core principles the Illinois business community is built on,” Pritzker said in a statement Wednesday night.

Pritzker first called for regulating homeowners insurance rates last summer after Bloomington-based State Farm Insurance, one of the largest homeowners carriers in the nation, announced a 27.2% average rate increase across the state. He suggested at the time that State Farm and other companies were trying to shift disaster-related losses from other states onto the backs of Illinois consumers.

Although the insurance industry strongly denied that charge, the debate served to highlight the fact that Illinois, unlike most other states, has no law prohibiting companies from charging “excessive, inadequate, or unfairly discriminatory” premiums.

At the same time, Secretary of State Alexi Giannoulias called for putting tighter controls on auto insurance rates, alleging consumers — especially those in low-income communities — were being harmed by companies that base their rates on factors unrelated to their driving record, such as ZIP codes and credit ratings.

For Pritzker, the two bills represent a continuation of his push to put greater controls on the Illinois insurance industry. In 2023 and 2024, he successfully pushed legislation giving the Insurance Department authority to review and approve rates for small- and large-group health insurance plans.

In a joint statement, however, the Illinois Insurance Association, the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies all warned that increased regulation of insurance premiums will do nothing to address what they say are the root causes of rate hikes — rising repair costs, more severe weather and legal system abuses. Instead, they said the bills are likely to result in even higher costs for consumers.

“The impacts may not be felt immediately, but in the long term, the state’s current highly competitive market is likely to suffer and consumers could ultimately pay the price through higher insurance costs and more limited coverage options,” the industry groups said.

Both measures were sponsored in the House by Rep. Thaddeus Jones, D-Calumet City.

Legislative details

The final language of the homeowners insurance bill is contained in House Bill 4273, which passed the House 72-38 on Wednesday night. It requires companies to give policyholders at least 60 days’ notice before raising premiums by more than 10%.

It also prohibits companies from charging “excessive, inadequate, or unfairly discriminatory rates” and gives the Insurance Department authority to review company rate filings to determine if their rates meet that standard. And it prohibits companies from engaging in “cost-shifting” by requiring that rates be based on state-specific loss data.

Under the bill, companies would still be able to implement new rates as soon as they are filed with the Insurance Department. But the bill would give the department new authority to review those filings.

If the department finds a company’s rates do not meet the new standard, it would then have 60 days from the date of the filing to notify the company, which could then request a hearing to challenge the finding.

Ultimately, though, if the department’s finding stands, it would have authority to reject the rate filing and order the company to rebate any excess premiums it had collected under the filing.

The bill applies to renewal notices and new rate filings dated on or after July 1, 2027.

Automobile rates

A similar rate review process would apply to automobile insurance under the final language of Senate Bill 714, which passed the House 70-38 on Wednesday.

That bill also prohibits companies from charging excessive, inadequate or unfairly discriminatory rates. It does not, however, contain language prohibiting the use of factors such as residential ZIP codes or a driver’s credit score in setting premiums.

In an interview Thursday, however, Giannoulias said the bill achieves what he set out to accomplish.

“We’re now prohibiting rates that are excessive or discriminatory so that the pricing reflects actual risk rather than hidden formulas that create these inequities,” he said. “And it strengthens the Department of Insurance’s authority and timelines to review these filings, to challenge unjustified increases and require rebates if and when consumers are overcharged. … It was unfathomable to me that we’re one of only two states in America (with Wyoming) that doesn’t have any sort of accountability or transparency in the rulemaking, and the rulemaking process.”

The bill also requires companies to give customers at least 30 days’ notice of any rate increases greater than 10%.

It also prohibits insurers from passing on out-of-state disaster costs to Illinois customers. And it expands access to premium discounts for drivers age 55 and over who complete an approved defensive driving program.

The bill takes effect July 1, 2027. Both bills now await Pritzker’s signature.

Bloomington-based insurers react

State Farm sent 25News the following statement, reacting to the passing of both pieces of legislation:

“We’re disappointed the Illinois General Assembly passed legislation that makes sweeping changes to a highly competitive insurance marketplace – without addressing the underlying cost drivers that determine rates.

As we move forward, our focus remains on our customers. We will work to navigate the new regulatory path and continue serving Illinois homeowners and auto policyholders with the service, coverage, and reliability they expect.

This should be a call to action for Illinois. This legislation has not meaningfully tackled key long-term affordability drivers, including storm-chasing fraud, building resiliency, and legal system abuse. We urge lawmakers to address these issues, so reforms deliver real, meaningful relief for consumers. While we’re disappointed by what this package fails to achieve, we remain committed to our Illinois customers. Illinois should now prioritize the true drivers of cost, so policyholders see meaningful improvements in affordability and stability over time.”

COUNTRY Financial in Bloomington also provided a statement on their reaction to the insurance regulation bills:

“We remain committed to ensuring insurance protections are both affordable and available to people, families, and businesses in Illinois. Inflation pressures related to auto repair parts, building materials and labor remain a real issue. Going forward, it will be important to monitor the ultimate long-term impacts of this legislation on insurance affordability and availability here in Illinois.”

Another outspoken opponent of the legislation was the Illinois Insurance Association, which warned the measure could drive insurance companies out of the state and reduce market competition.

“We don’t want to see the 200 plus companies that write auto and homeowners’ insurance in Illinois leave,” said Kevin J. Martin, executive director of the Illinois Insurance Association.

“We want to continue to see the insurance companies compete against each other, which for the most part decrease how much people have to pay in auto and homeowners in Illinois.”

Martin said Illinois does not need the legislation and argued the state’s insurance market already encourages competition among companies. After more than 30 years representing the industry, he said recent premium increases have largely been driven by rising costs over the past two to three years and would eventually stabilize.

For homeowners’ insurance, Martin pointed to severe weather events, including storms and tornadoes, as major cost drivers that have contributed to insurance losses.

With the legislation advancing and receiving support from Gov. JB Pritzker, Martin said he does not expect the measure to lower auto or homeowners’ insurance costs.

“All it is, is additionally regulatory burden. And, it will require insurance companies to have to jump through hoops to be able to get the rate approved. And, when that happens… it increases the costs. Adn that’s what we don’t want to see here in Illinois, we want to let the market dictate what is going on and what people have to pay,” said Martin.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

This article first appeared on Capitol News Illinois and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.