Illinois Lawmakers Reassess Homeowners Insurance Rate Regulation

Illinois lawmakers are reconsidering a legislative proposal to enhance regulatory compliance requirements over homeowners insurance rate adjustments. This stems from a significant rate hike by State Farm Insurance last year, averaging a 27.2% increase across the state, largely driven by accumulated losses due to weather-related events. The proposed law would empower the Illinois Department of Insurance to approve or deny rate changes, shifting away from the current "use-and-file" system.

The bill, which had previously passed the Senate but fell short in the House, is back for another vote led by Representative Robyn Gabel. Regulatory Compliance and Provider Considerations - This legislation mandates that premium rates must be non-excessive, adequate, and not unfairly discriminatory. It also requires carriers to use state-specific data to prevent Illinois policyholders from bearing costs due to other states' disaster losses.

Industry Implications and Risk Management - A controversial aspect of the bill is the retrospective review authority proposed for the Department of Insurance. This could compel insurers to issue refunds for non-compliant rates, a move opposed by the insurance community for its indefinite retroactive implications. As discussions continue, balancing regulatory oversight with operational flexibility remains central, particularly as Governor JB Pritzker prepares for his upcoming budget address, potentially impacting the state's approach to insurance regulation reform.