Illinois pushes rate-hike protections forward despite consumer cost fears

(The Center Square) – Home and auto insurance providers in Illinois could face new oversight and regulation after a Senate bill recently passed the House, despite concerns from Republican lawmakers and insurance industry groups.

The bill passed primarily along party lines, even though GOP representatives and insurance companies warned it could drive up premiums and destabilize the state’s insurance market.

Senate Bill 1486 would require home and auto insurance providers to notify consumers of any rate hike more than 10% at least 60 days before the increased rate taking effect.

It also gives the Illinois Department of Insurance expanded oversight of rate increases, including the ability to review and challenge raises in rates deemed unfair or discriminatory, according to the bill’s text.

Insurance groups, such as the American Property Casualty Insurance Association, have posed concerns that the proposed legislation could have unintended consequences, such as an increase in premiums and a reduction in market competition – if insurers decide to leave the state over the new regulations.

Rep. Jeff Keicher, R-Sycamore, voiced concerns in a committee hearing and on the house floor before the bill’s passage. An agent for State Farm, Keicher said his concerns are only in the interest of his constituents.

“My biggest concern as a member of the industry is Illinois' current rate setting environment allows for competition and it also allows for those that do compete in the Illinois insurance market to price their product to attract folks to come,” Keicher said.

Notable supporters in the state – including Gov. J.B. Pritzker, Secretary of State Alexi Giannoulias and top Democratic legislators – have all said the bill is to hold insurers accountable to their policyholders in the state. Pritzker urged state lawmakers to expand consumer protections in the wake of a major rate hike by State Farm last July.

Keicher said home insurance costs are climbing in part because of an overall increase in the cost of claims for insurers. He pointed to rising home values, higher prices for building materials, and a predatory practice known as storm chasing, in which bad-faith contractors canvass storm‑damaged neighborhoods, offering free inspections and pushing unnecessary repairs to trigger insurance payouts.

Rep. Thaddeus Jones, D-South Holland, spoke to the intentions of the bill and its amendments before the House, saying Illinois is one of only two states in the nation that doesn’t have any form of rate review.

“Consumers deserve to understand how their rates are set. They deserve a system that is fair, not one that punishes them for circumstances that they can't control, and they deserve leaders that are willing to take a hard look at what's driving their increases,” Jones said.

The bill returns to the Senate in its updated form.