Illinois Puts the Brakes on Unchecked Home, Auto Insurance Rate Hikes | Insurify

Illinois homeowners and drivers will soon receive more warning before a large insurance increase — and, for the first time, state regulators will be able to challenge rates they determine are excessive or unfair.

Gov. JB Pritzker signed two bills in August that change how Illinois regulates personal auto and homeowners insurance rates. Beginning July 1, 2027, insurers will have to justify their rates with actuarial data, and the Illinois Department of Insurance will have the authority to reject rates that don't meet the state's new standards.

Before these laws, Illinois was the only state that could not review or challenge homeowner and auto insurance rates. Insurers submitted rate information, but Illinois didn't have rules against "excessive, inadequate, or unfairly discriminatory" rates.

Most other states base their property and casualty rating laws on this three-part rule. And the National Association of Insurance Commissioners includes these standards in its model laws.

"For too long, Illinois working families have been forced to pay higher insurance bills without receiving a clear explanation of why their rates went up," Pritzker said in a statement announcing the signing of the bills.

"That changes today," the statement continued. "These commonsense reforms will bring greater openness and accountability to the insurance industry while continuing to preserve the competitive market that has served Illinois consumers. At a time when families are feeling squeezed by rising costs, we are taking action to ensure Illinoisans receive a fair deal when protecting their homes and cars."

Consumer and labor groups, such as Illinois PIRG, AARP Illinois, Citizen Action/Illinois, Housing Action Illinois, the Illinois AFL-CIO, and AFSCME Council 31, supported the new laws.

Illinois has now adopted several common regulatory features with the signing of these bills, including:

A statutory ban on "excessive, inadequate, or unfairly discriminatory" ratesActuarial review of rate filingsAuthority for the insurance department to disapprove noncompliant ratesAdministrative hearings and judicial review for insurersRefund authority when insurers have already collected a rejected rateDetailed requirements for supporting data for rate filings

The laws don't cap premiums or guarantee lower insurance bills. Insurers can still begin charging a new rate after filing it with the state. But regulators will be able to review that rate, order the insurer to stop using it, and potentially require rebates for affected customers.

Opponents say new laws will raise costs

In a joint statement, the Illinois Insurance Association (IIA), the American Property Casualty Insurance Association (APCIA), and the National Association of Mutual Insurance Companies (NAMIC) said the new laws will lead to higher home and auto insurance costs and fewer coverage options.

"Proponents of these measures claim the laws will protect consumers from rising insurance costs, but in reality, they do nothing to address the factors driving premiums higher, including more severe weather, inflationary forces, higher repair and replacement costs, and legal system abuse," the statement said.

The organizations noted that Illinois now has more tornadoes than any other state and has already set a new record for tornadoes this year. As of Aug. 7, Illinois had 225 recorded tornadoes, according to data from the National Oceanic and Atmospheric Administration.

"This shift will make it harder for insurers to respond in real time to market conditions as well as adjust rates up or down based on actual claims experience," the industry groups said.

They argued that the legislation:

Doesn't address severe weather, inflation, repair costs, or "legal system abuse"Moves Illinois toward a more rigid rate-approval systemCould make it harder for insurers to respond to changing claims costsRisks lowering competition and consumer options

Looking at how the law has changed

The two newly signed bills have the potential to significantly affect the Illinois insurance market. Here's an outline of the changes.

What's next? Will the changes push rates higher?

The debate over the legislation ultimately comes down to whether increased oversight will protect consumers from unsupported rate increases or make insurance more expensive by discouraging competition.

NAMIC estimates that the regulatory changes could cause Illinois homeowners insurance premiums to increase by approximately 20%. The organization didn't specify a time frame for that projected increase, and the new rate-review system won't take effect until July 2027.

Insurify's latest home insurance price projections provide an illustration of what a 20% increase would mean for Illinois homeowners.

The average Illinois homeowners insurance premium was $3,380 per year at the end of 2025, or about $282 per month, according to Insurify data. Insurify's data scientists project the state's average will rise 5%, or $179, to $3,559 by the end of 2026.

If NAMIC's projected 20% increase were applied to the same $3,380 baseline, the average premium would rise by $676 to $4,056 annually — about $338 per month.

That's a difference of $497 per year, or about $41 per month, between the two scenarios.

The projections aren't directly comparable forecasts. Insurify's estimate reflects expected insurance and market conditions through the end of 2026, while NAMIC's figure is an industry estimate of the possible effect of laws that take effect in July 2027.

Whether the new system ultimately saves consumers money or adds to their costs will depend on how aggressively regulators review rates, how insurers respond, and what happens with severe weather, rebuilding expenses, and other underlying claims costs.

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