Illinois Homeowners Insurance Rate Regulation Proposal
Illinois legislators are revisiting a legislative proposal aimed at enhancing state oversight of homeowners insurance rate adjustments due to substantial premium increases initiated by State Farm. Governor JB Pritzker advocates for this regulation, particularly after State Farm attributed its average 27.2% rate hike to weather-related losses. The goal is to address AI-driven prior authorization delays and bolster regulatory compliance requirements within the industry.
Proposed Regulatory Changes
Previously, the Senate approved a bill enabling the Department of Insurance to review and determine the appropriateness of rate increases, though it narrowly missed House approval by four votes. Representative Robyn Gabel, leading the legislation, has reintroduced the motion to maintain its presence on the legislative agenda, aiming for a House vote at the start of the 2026 legislative session. This effort highlights the importance of regulatory compliance and risk management in the insurance landscape.
Current System and Proposed Reforms
Illinois presently operates under a unique "use-and-file" system where carriers set premiums without prior regulatory approval, a process that lacks industry-standard consumer protection measures available in other states. The proposed legislation mandates prohibiting excessive premiums, requiring a 60-day notice for rate hikes over 10%, and preventing disaster-related cost allocations to Illinois policyholders. It also empowers the state to evaluate and adjust rates post-implementation, with authority to mandate rebates if deemed unfair.
The insurance industry expresses concerns about retroactive reviews and potential last-minute amendments to the bill's language. With the regulatory environment actively evolving, swift legislative action is anticipated as Governor Pritzker is set to present his agenda to the General Assembly later this week, signalling crucial changes for payers and providers seeking underwriting and claims stabilization.