Gov. JB Pritzker signs protections against insurance rate hikes

Olivia Olander, Jeremy Gorner, Chicago TribuneChicago Tribune

Drivers and homeowners will have greater protections against insurance rate hikes after Gov. JB Pritzker on Tuesday signed legislation prohibiting excessive increases.

“It’s not asking too much to say to insurance companies, ‘If you’re telling your customers that rate hikes are necessary, you should be able to prove why,’” Pritzker said Tuesday.

The legislation, which took years to pass, hit on a theme Democrats who control the General Assembly have been trying to persuade voters this election year is a top priority: passing bills that make goods and services more affordable for Illinoisans.

Nearly all states already had the ability to challenge excessive auto and homeowners insurance rate hikes, officials said.

The push to lower insurance rates gained momentum last summer when State Farm announced it would raise its homeowners insurance rates by more than 27%, citing costly repairs from weather-related disasters.

The insurance giant said weather-related losses in other states had hurt its bottom line, including nearly 13,000 claims and more than $4.2 billion paid out to California homeowners who suffered losses during the Los Angeles-area wildfires. In Illinois, the company said it paid out $1.26 in claims for every $1 in premiums collected from homeowners in 2024, including $638 million in hail damage claims — second only to Texas.

The auto insurance law — which was pushed by Secretary of State Alexi Giannoulias, who announced Sunday he’s running for mayor of Chicago in 2027 — gives state regulators a stronger framework to challenge rate hikes deemed excessive. Giannoulias’ office said the measure comes after Illinois motorists saw their rates jump 18% in 2024.

It brings “a watchdog with real teeth,” Giannoulias said Tuesday.

The auto insurance law bans “excessive, inadequate or discriminatory” rates that don’t reflect actual driving risk; gives the Illinois Department of Insurance more power to review rates, reject unfair hikes and order rebates to overcharged customers; prevents insurers from passing out-of-state disaster costs onto Illinois motorists; and requires insurers to give customers 30 days’ notice before any renewal premium increase exceeding 10%.

The homeowners insurance law similarly prohibits rates that are “excessive, inadequate, or unfairly discriminatory” but requires 60 days’ notice — rather than 30 — before a renewal premium increase exceeding 10%.

Opponents, meanwhile, have argued the measures don’t do anything to respond to the causes of higher premiums — more costly repairs, more severe weather and legal system abuse — and will instead push Illinois toward a more rigid rate-approval system that makes it more difficult for insurers to respond to evolving market conditions.

Industry organizations blasted the governor’s signing of the law and said it would result in a worse situation for consumers, not better.

“Illinois residents should be prepared for the potential impact of these new laws: higher home and auto insurance costs and fewer options for coverage,” the joint statement from the Illinois Insurance Association, the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies said.

“These new laws, which put that success at risk, also highlight why it is essential that all stakeholders have a seat at the table throughout the legislative process,” the statement continued. “Policies developed without meaningful input from those responsible for serving consumers risk producing unintended consequences that could ultimately leave Illinois residents paying more while having fewer choices.”

Meanwhile, Democratic state Sen. Michael Hastings of Frankfort at the news conference Tuesday said there’s more legislation he’d like to see passed, including banning companies from declining to renew customers due to filing a legitimate claim — “not kicking people when they’re down on their luck.”