Bill to regulate homeowners insurance rates could reemerge following State Farm’s double-digit rate hike

Illinois lawmakers are poised to make a second attempt at passing a bill that would give state regulators more authority to control the rising cost of homeowners insurance for individual property owners and for Condo and Homeowners Associations.

Gov. JB Pritzker called for the legislation last summer after Bloomington-based State Farm Insurance announced it was raising premiums in Illinois an average 27.2%, citing years of losses in its property casualty line of coverage due to weatherrelated disasters in the state.

A bill to give the Illinois dept. of Insurance [IdI] authority to approve or reject insurance rate increases passed the Senate during last fall’s veto session. But when it returned to the House for a vote to concur with changes the Senate had made, the amended bill fell four votes short of the 60 needed for passage. That left many to believe the bill had died.

The following day, however, the bill’s chief House sponsor, Rep. Robyn Gabel [18th], refiled a motion to concur, which is allowed under House rules. And Pritzker has said since the end of the veto session that he still wants the legislation to pass.

“They get a second bite at the apple,” kevin Martin, executive director of the Illinois Insurance Assoc., said in an interview.

Gabel said that no decision had been made about calling the bill for a second vote. But Martin said people in the industry have heard the bill could be called as early as Feb. 16, when the House and Senate return to the Statehouse to begin the 2026 legislative session in earnest.

Current environment Insurance, like most everything, is more expensive in Illinois. The industry is blam- ing bad weather and higher construction costs for the rate increases. For Condo and HoAs, they worried about delayed maintenance and repairs.

Mirroring trends in the single-family home market, insurers are boosting premiums or exiting the business of covering HoAs’ common property entirely, citing rising losses from weather and aging buildings.

The condo industry is also aging. The first condominium declaration filed in Chicago was on January 31, 1963. The first North Side condo building rose at 339 W. Barry in Lake view. The industry expanded quickly throughout the 1960s, 70 and 80s, and all those buildings are now 50 and 60 years old, so they all falling apart now at the same time too.

Large insurance premium hikes usually end up passed on to individual owners in the form of higher monthly assessments.

The controversy over State Farm’s rate hike last year raised attention to the fact that Illinois stands out among states for having exceptionally weak regulations over the insurance industry.

Advocates for the legislation argue that every state in the nation except Illinois has a law that prohibits insurance companies from charging “inadequate, excessive or unfairly discriminatory” premiums. And other states’ insurance regulators have authority to review and modify proposed rate increases.

Illinois, however, is known in the insurance industry as a “use-and-file” state, meaning companies can raise their rates at any time and immediately put them into effect before filing the new rate schedule with state regulators.

The IdI has authority to license companies and agents to do business in the state. It also has authority to make sure insurance products sold in Illinois comply with state laws and that companies honor the terms of their policies. But it has no other authority to review or approve the rates they charge.

douglas Heller, director of insurance for the Washington-based Consumer Federation of America, described Illinois’ law last year as “among the most toothless in the nation.”

In the wake of State Farm’s rate increase last year, Pritzker suggested the company was trying to shift the cost of disaster-related losses in other states onto the backs of Illinois consumers, and he said legislation was needed to prevent that practice from happening in Illinois.

“We need to make sure Illinois homeowners are not paying for losses that companies experience in other states,” Pritzker said in an op-ed published in the Chicago Tribune that was cosigned by House Speaker emanuel “Chris” Welch and Senate President don Harmon.

State Farm officials firmly denied that allegation, and Martin insisted no insurance companies in Illinois engage in that practice.

“We have never seen anything like that, and we would argue very strongly that that does not happen and cannot happen based on the actuarial data that the companies have to provide in Illinois on Illinois losses,” he said.

Proposed changes The call for new legislation to regulate homeowners insurance rates led to negotiations between the governor’s office, legislative leaders and the insurance industry. But the final language wasn’t unveiled until the final hours of the fall veto session.

The language was put into a Senate amendment to HB 3799 It included language prohibiting ‘excessive, inadequate, or unfairly discriminatory” rates. It also called for banning the practice of “cost-shifting” by requiring companies to use state-specific loss data to develop their rates whenever possible.

The bill also would leave in place the state’s ‘‘use-and-file”’ method of setting rates, meaning companies would not have to seek advance clearance from state regulators before implementing rate changes. But it would require them to give consumers at least 60 days’ advance notice before raising rates by 10% or more.

The major sticking point for the insurance industry, however, was the provision giving the Dept. of Insurance authority to review and approve or modify rates after they are put into place.

Under the proposed language, if the agency found a company’s rates to be excessive, inadequate or unfairly discriminatory, it would send the company a notice specifying the agency’s objections. Companies then would be allowed to defend their rates at an administrative hearing. Buť after that hearing, if the agency still believed the rates violated standards of the law, it would be authorized to order the company to rebate excess charges back to customers.

According to Martin, the industry’s main objection to that language was that there was no limit on how far back in time the agency could look in its rate review process.

“They can go back forever,” he said.

‘‘We just believe that, in all of the negotiations that we had, for them to come in at the last minute with this type of language, of the changes that they made, was just something that we thought was really unfair,” Martin said.

The work of the House and Senate session will begin in earnest this week, starting Tuesday, when both chambers will meet and begin holding committee hearings.