Bill to regulate homeowners' insurance rates fails on final day of veto session

SPRINGFIELD – The Illinois House rejected a bill Thursday that would have given the state Department of Insurance authority to regulate homeowners' insurance rates.

Gov. JB Pritzker had called for the legislation in July after State Farm Insurance announced it was raising rates for property and casualty insurance in Illinois an average 27.2%.

The company attributed that hike to losses it sustained from weather-related disasters in Illinois. But Pritzker and legislative leaders suggested the company was shifting the cost of disasters in other states onto the backs of Illinois consumers.

"As states across the country face even more extreme weather than we do, we need to make sure Illinois homeowners are not paying for losses that companies experience in other states," Pritzker said in an op-ed column published in the Chicago Tribune July 30 that was cosigned by House Speaker Emanuel "Chris" Welch and Senate President Don Harmon.

While State Farm insisted the Illinois rate hikes were the direct result of losses the company incurred in Illinois, Pritzker and Insurance Director Ann Gillespie accused the company of refusing to provide any evidence to support that claim.

At the same time, they used the controversy to highlight the fact that Illinois is the only state in the nation without a law prohibiting excessive, inadequate or discriminatory insurance premiums, and the only state without the authority to review insurance rates for either homeowners' or auto insurance.

"I think that's an important protection for consumers," Gillespie said in an Oct. 14 interview with Capitol News Illinois. "It also helps to pretend against any risk of cost shifting, because if we're the only one not regulating it, we make a nice target for any potential cost shifting."

Gillespie said she did not have direct evidence that State Farm or any other insurance company was shifting the cost of losses in other states to Illinois customers. But she did say, "I see things that raise questions, and without the ability to review rates, we cannot dig in, we cannot compel transparency to be able to answer those questions."

The proposal was contained in a pair of Senate amendments to an unrelated insurance bill that had passed the House in April. It would have required that insurance companies give customers 60 days' advance notice of any premium increase greater than 10%.

The bill also would have required companies to use Illinois-specific data on insurance losses to justify rate increases for Illinois customers. And it would have prohibited companies from charging "excessive, inadequate, or unfairly discriminatory" premiums for homeowners' insurance.

Although the bill would not have required insurance companies to get prior approval from the department for any changes in premiums, it would have given the department authority to review rate changes after they were put into effect. It also would have established a judicial review process for companies to appeal any finding that its rates were unreasonable.

But if those appeals were rejected, the bill would have authorized the department to order companies to refund excessive premiums back to their customers.

Opposition on the floor

State Rep. Jeff Keicher, R-Sycamore, argued those provisions amounted to a radical shift in Illinois' regulatory environment, which ultimately would have led to higher premiums for consumers.

"This bill will turn the industry on its head, cause uncertainty in a framework that's never been tried before, and every single one of your constituents who has a homeowner's policy will pay extra because of the uncertainty that It creates," Keicher said. "It's the uncertainty of the rate environment that we are worried about here."

The amendments passed through the Senate on Thursday afternoon on a vote of 41-15. But a subsequent vote in the House to concur with those amendments fell four votes short of the 60 needed for passage. Six House Democrats were recorded as voting "present."

Bills are rarely defeated on the floor of either chamber because leaders are usually careful not to call bills for a vote unless they are confident there are enough votes to pass them. And on those occasions when a vote appears to be coming up short, the bill's sponsor will typically make a motion just before the final tally is recorded to delay final consideration of the bill so it can remain alive and negotiations can continue.

State Sen. Michael Hastings, D-Frankfort, the chief sponsor of the insurance bill, said he plans to reintroduce the bill in the 2026 session. He attributed its defeat in the veto session to last-minute lobbying by the insurance industry.

"The insurance industry, you want to talk about one of the strongest lobbying arms at the Capitol," he said in an interview Monday. "Ninety-nine percent of that piece of legislation was agreed upon."

Kevin Martin, executive director of the Illinois Insurance Association, applauded lawmakers for not passing the bill, saying it created "an extreme prior-approval system unlike anywhere else in the country," and that it would have driven up costs for Illinois consumers.

"This bill would have jeopardized Illinois' competitive insurance market and had the potential to drive up premium costs for Illinois families by 20%," Martin said in a statement.

Pritzker's office did not immediately respond to a request for comment.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.