Illinois lawmakers pass auto, home insurance reform

Chicago Sun-Times

After a year of negotiations and failed proposals, the state legislature has passed two bills aimed at on insurance rate hikes. The measures now await approval from Gov. JB Pritzker, who has been a vocal supporter of the legislation.The bills require companies to notify policyholders long before any rate increases of 10% or more, and to give the state's Department of Insurance authority to review and block unfair hikes. The DOI’s window to review differs between auto and home insurance — 60 days for home insurance and 30 days for auto. If the DOI finds new rates unreasonable within those windows, insurers must refund customers the difference.Illinois is the only state in the country without a similar form of home insurance oversight, and one of two to not have any form of auto insurance oversight.“Too many families have dealt with unexplained, unfair insurance price hikes on their homes and cars, so this legislation helps protect consumers while maintaining the core principles the Illinois business community is built on,” the governor’s office said in a statement.The push for home insurance reform was kicked off by Pritzker last summer, following a 27% home insurance rate hike by Bloomington-based insurance giant State Farm. Illinois Secretary of State Alexi Giannoulias has also called for auto reform for the last three years.“Insurance companies are raking in record profits while Illinois families are choosing between their car insurance and groceries,” Giannoulias said in a statement. “Even safe drivers doing everything right are getting hammered with hike after hike. This bill finally gives Illinois the tools every other state but one already has: the power to say no to unfair rates.”After months of negotiations, the legislation has undergone multiple rounds of amending to make it more palatable for the insurance industry.Rep. Thaddeus Jones, a Democrat from Calumet City who carried the bill in the House, said the legislation struck a middle ground between the two parties.“Nobody got 100% of what they wanted in either the auto bill or the homeowners bill,” Jones said.The legislation was generally supported by Democrats and opposed by Republicans, who argued that new regulations drive insurers out of the state and jeopardize Illinois’ competitive insurance market.Rep. Jeff Keicher, R-Sycamore, said allowing the DOI to retroactively correct rate increases “creates a window of profound uncertainty” that would drive up prices. He argued auto insurance reform was unnecessary and pointed to a U.S. News & World Report finding that Illinois had the sixth lowest auto insurance premiums in the country.After months of negotiations, lawmakers alleviated some of Illinois Insurance Association's concerns for home insurance reform but couldn’t bring them on board for auto reform.“The impacts may not be felt immediately, but in the long term, the state’s current highly competitive market is likely to suffer and consumers could ultimately pay the price through higher insurance costs and more limited coverage options,” said the IIA, the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies.