Illinois lawmakers passed two bills this week that would give the insurance department the power to review homeowner and auto rate applications to determine whether they are too high.
The insurance industry has strongly opposed these legislative measures, warning that expanded government control over insurance rates will reduce competition and drive up prices.
HB 4273 and SB 714 give the Illinois Department of Insurance the ability to review and overturn rate increases that are deemed “excessive, insufficient, or unfairly discriminatory.”
NAMIC regional vice president Brian Christenberry said the bills add a stricter regulatory framework but do not address the underlying drivers of premium increases.
“Illinois’ insurance market is highly competitive, but when policymakers focus on controlling rates rather than reducing costs and risks, consumers end up with fewer choices and a more unstable market,” Christenberry said.
Illinois leaders have been urging lawmakers for years to pass legislation that would give the insurance department greater authority to rein in rate increases. Gov. JB Pritzker said Wednesday he will sign the bills into law.
“Too many families have experienced unexplained and unfair increases in home and nursing insurance prices, so this legislation helps protect consumers while upholding the core principles on which Illinois’ business community is built,” Pritzker said in a statement.
Historically, Illinois has operated under a use and file system that allows insurance companies to implement premium changes without prior approval from the Department of Insurance.
Under HB 4273, homeowners insurance companies can still implement new rates as soon as they are submitted. If the Department of Insurance determines through an actuarial review that a filing is excessive, inadequate, or unfairly discriminatory, the Department will have 60 days from the date of filing to notify the insurance company.
The insurance company can then request a hearing, during which time the filing will remain in effect until the hearing is concluded and a final order is issued.
If the department’s findings hold up after the hearing, insurance companies will be required to refund policyholders the premiums they have collected.
Additionally, the bill would require insurance companies to provide at least 60 days’ notice before raising renewal premiums by 10% or more. insurance company
The legislation prohibits cost-shifting and requires insurers to use state-specific loss data when setting rates. State leaders argue that insurance companies like State Farm are passing on out-of-state costs to Illinois homeowners.
The bill will take effect on July 1, 2027.
SB 714 contains similar language regarding regulation of auto insurance rate filings.
If the insurance department determines that the filing does not meet the requirements, the department will notify the insurance company within 40 days, and the insurance company can request a hearing.
The bill requires auto insurance companies to give consumers at least 30 days’ notice before raising renewal premiums by 10% or more. The legislation also includes a provision that prohibits insurance companies from passing on the costs of out-of-state risks to Illinois drivers.
The bill takes effect on July 1, 2027.
Photo: Drone view of the Illinois State Capitol in Springfield. The Illinois State Capitol is the seat of the legislative and executive branches of the Illinois state government in the United States.
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