Illinois to crack down on insurance rate hikes for auto and homeowner policies

SPRINGFIELD — Illinois lawmakers on Wednesday advanced two long-debated measures to prevent insurance companies from raising auto and homeowners’ insurance rates without more stringent state oversight, and Gov. JB Pritzker said he intends to sign both into law.

The legislation represents some of the latest efforts by Democrats who control the General Assembly to meet one of their primary goals before their scheduled spring adjournment Sunday — making life’s bare essentials more affordable for Illinoisans. If signed, both measures would take effect July 1, 2027.

The push 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.

Championed by Secretary of State Alexi Giannoulias, who is considering a run for Chicago mayor, the auto insurance bill passed 70-38 in the House and, for the first time, gives state regulators more of a framework to challenge rate hikes deemed excessive. His office said the measure comes after Illinois motorists saw their rates jump 18% in 2024.

The auto insurance bill would ban “excessive, inadequate or discriminatory” rates that don’t reflect actual driving risk; empower the Illinois Department of Insurance to review rate filings, reject unfair hikes and order rebates to overcharged customers; prevent insurers from passing out-of-state disaster costs onto Illinois motorists; and require insurers to give customers 30 days’ notice before any renewal premium increase of more than 10%.

“Insurance companies are raking in record profits while Illinois families are choosing between their car insurance and groceries,” Giannoulias said. “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.”

The homeowners’ insurance bill, which passed 72-38, 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%.

Pritzker in a statement praised both bills as a way “to support working families.”

“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,” Pritzker said. “I look forward to signing these common sense protections into law.”

State Rep. Bob Morgan, a Deerfield Democrat who serves as vice chair of the House Insurance Committee, made the case for the auto insurance bill on the House floor before it passed.

“This impacts real people,” he said. “If you can’t afford your car insurance, you can’t get to work. If you can’t afford your car insurance, you can’t take your kids to school. This is an important issue. We’re going to make sure that Illinois is more affordable. This is something that insurance companies are going to be able to absorb because they do it in every other state.”

State Rep. Thaddeus Jones of Calumet City, the main House sponsor of both bills and chair of the House Insurance Committee, dismissed concerns about adverse consequences for the industry.

“The industry has survived changes. They will survive changes. And they will continue to be competitive,” he said. On the homeowners’ bill, he acknowledged the compromise nature of the final product: “This bill is near what the negotiated language was with the industry. They didn’t get 100%. The Department of Insurance didn’t get 100%.”

Opponents argue the measures do nothing to address the underlying drivers 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 harder for insurers to respond to market conditions in real time.

“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,” the Illinois Insurance Association, the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies said in a joint statement.

Republican state Rep. Jeff Keicher of Sycamore, who has worked in the insurance industry, argued on the House floor that the problem lawmakers are trying to solve is already resolving itself, citing a report showing Illinois ranks sixth-lowest in the nation for annual auto insurance rates.

“We are not the horror story that is being sold to us,” he said. “The problem is solving itself. And we shouldn’t rush to impose (a) new bureaucratic apparatus. The market is working in the state of Illinois.”

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