Car insurance rate hikes could require state approval under new bill

State Rep. Will Guzzardi, state Sen. Javier Cervantes, co-director of Citizen Action Illinois William McNary, and Abe Scarr of Illinois Public Interest Research Group, announce House Bill 2203 in Springfield on Feb. 8, 2023.Blue Room Stream screenshot

Two state lawmakers from Chicago want to tap the brakes on car insurers who they say continue to raise rates and discriminate against drivers based on credit score, Zip code and gender.Forty-eight states have oversight of car insurer's rate hikes and prohibit that type of discrimination  but Illinois is not one of them.House Bill 2203  sponsored by state Sen. Javier Cervantes and state Rep. Will Guzzardi could change that.The bill would empower the state's insurance department to reject or modify rate hikes and would end the use of non-driving factors in setting rates.The bill, which has been talked about over the last year, comes after car insurers made $896 million in excess profits in Illinois during the first year of the pandemic when drivers commuted less and costs declined  and then raised rates by more than $1.1 billion in 2022."We simply don't have the tools in place to enforce accountability for the insurance companies," Cervantes said Wednesday in Springfield.One of Guzzardi's constituents had recently transitioned genders, from male to female, and saw an instant 20% increase in their car insurance rate after updating their driver's license."And that is perfectly legal in Illinois," Guzzardi said.The bill would prohibit insurers from setting rates based on race, gender, employment, credit, education level, religion, credit score and other factors.Credit scores and demographic information are used by insurers to discriminate against poorer drivers, Guzzardi said.Guzzardi pointed to a Consumer Report analysis that found an excellent driver with poor credit pays nearly $1,000 more a year than a driver with good credit and a DUI."I think that tells you the whole story," Guzzardi said. "This is not about safe driving. This is about people with higher means being charged less and poor folks getting charged more."For instance, insurers have charged 30% higher car insurance rates in majority-Black Zip codes compared to other areas with similar accident costs, according to a 2017 ProPublica investigation.The Illinois Coalition for Fair Car Insurance Rates  composed of 15 consumer, community and civil rights groups  is backing the bill.Their spokesman, Abe Scarr, also director of Illinois Public Interest Research Group, said car insurance rate hikes should undergo the same state-level review that utility companies have.The combined proposed rate hikes over the next year by Illinois' major utilities ComEd, Nicor, Peoples Gas  is still less than the $1.1 billion rate hike last year by Illinois' top 10 car insurers, Scarr said, citing a PIRG study from last week.Last month, Allstate filed an Illinois car insurance rate hike of a $63 million, which will raise average customer premiums by $174 annually, without any state oversight."Our laws and regulations allowed for over a billion dollars of car insurance rate hikes in a single year without any review," Scarr said. "It's time to change that."The state's four major car insurance companies  State Farm, Geico, Progressive and Allstate did not immediately reply to requests for comment.