Illinois Bill to Control Homeowners Insurance Rates Faces Reevaluation
Illinois legislators are set to re-evaluate a pivotal bill aimed at strengthening state regulatory control over homeowners insurance pricing. Governor JB Pritzker pushed for this legislation following State Farm Insurance's substantial premium increase, citing weather-related disaster losses as the reason for a 27.2% rate hike in Illinois. This move could reshape the regulatory compliance requirements for insurers like State Farm, headquartered in Bloomington.
Proposed Regulatory Changes
The bill intends to grant the Illinois Department of Insurance the power to approve or deny rate increases. It previously passed in the Senate during the fall veto session but failed by four votes in the House. Despite this setback, Representative Robyn Gabel has reintroduced the measure, signaling potential legislative action and heightened focus on regulatory compliance.
Kevin Martin, executive director of the Illinois Insurance Association, indicated that the legislative sponsors might soon bring the bill to a vote as the 2026 session begins. With Illinois' current lenient insurance industry regulations compared to other states, this proposal could significantly impact insurers' operations, risk management, and underwriting practices.
Current Regulatory Framework
Illinois operates under a "use-and-file" system allowing insurers to modify and implement rates before notifying regulators. This sets the state apart from others requiring pre-approval of rate changes to ensure they are not excessive or unfairly discriminatory. This regulatory distinction has been criticized by Douglas Heller from the Consumer Federation of America as lacking comprehensiveness.
Governor Pritzker suggested that State Farm may be burdening Illinois consumers with losses from other states, prompting calls for legislative changes. While State Farm and industry representative Kevin Martin have denied these claims, the proposed adjustments could alter state-specific actuarial practices, emphasizing transparent rate calculations based on local data.
Implications for the Insurance Industry
The revised bill retains the "use-and-file" system but requires a 60-day consumer notice for any rate hikes of 10% or more. Concerns arise regarding the Department of Insurance's potential power to retroactively review or adjust rates, a provision that troubles insurers due to its unpredictable impact on the market and claims management.
As the Illinois General Assembly reconvenes, this legislation is poised to shape discussions, especially with Governor Pritzker's upcoming budget and State of the State address. The bill's implications for regulatory practices and market dynamics underscore the evolving nature of risk management and compliance within Illinois' insurance sector.
The source of this information is Capitol News Illinois, a reliable provider of state government news supported by the Illinois Press Foundation and the Robert R. McCormick Foundation.