Illinois Considers Reforming Auto Insurance Rates to Focus on Driving Records

Illinois auto insurance premiums are influenced more by non-driving-related factors such as neighborhood, credit score, and data from third-party apps rather than driving records. This ratemaking approach results in safer drivers with poor credit paying significantly higher premiums compared to those with poor driving records but better credit.

For example, a driver with a DUI but excellent credit may pay less than a driver with a clean record and poor credit. These practices disproportionately impact senior citizens, people of color, and low-income residents, exacerbating economic disparities and access to transportation.

Illinois and Wyoming are the only states allowing insurers to increase rates without prior state oversight, contributing to a lack of transparency and accountability. Legislation (House Bill 1234) is being proposed to bring expert analysis, public input, and regulatory oversight to scrutinize and potentially reform non-driving-related factors in rate-setting to enhance fairness and safety on the roads. Addressing these inequities is critical as rising premiums in Illinois further threaten affordability and compliance with mandatory insurance laws.