Illinois House Rejects Bill to Regulate Homeowners Insurance Rates

The Illinois House rejected a bill granting the state Department of Insurance the authority to regulate homeowners' insurance rates.

The legislation was prompted by a significant 27.2 percent rate increase announced by State Farm Insurance, attributed to weather-related losses in Illinois. However, state officials, including Governor J.B. Pritzker, raised concerns that the company might be allocating losses from other states to Illinois consumers without providing evidence. Illinois remains the only state lacking laws to prohibit excessive, inadequate, or discriminatory insurance premiums and without authority to review homeowners' or auto insurance rates.

The proposed bill would have required advance notice for premium increases exceeding 10 percent, use of Illinois-specific loss data for rate justification, and prohibited unfair premium practices. While it did not mandate prior approval for rate changes, it allowed for post-implementation review and potential refunds for excessive premiums. Critics, including some legislators and insurance industry representatives, argued that the bill could create regulatory uncertainty and increase premiums. Although the amendments passed the Senate, the House vote fell short by four, leading to the bill's defeat.

The chief sponsor plans to reintroduce the bill in the 2026 session, attributing its defeat to late insurance industry lobbying. The Illinois Insurance Association opposed the bill, labeling it an extreme prior-approval system that could raise consumer costs by 20 percent. The debate highlights ongoing tensions between regulatory authority and market impacts in the state's homeowners' insurance sector.