Insurance bill combining homeowners and auto regulation passes House, awaits Senate action

SPRINGFIELD — A bill would give the Illinois Department of Insurance authority to review and approve rates for both homeowners and automobile coverage.

Those two proposals, which started as separate pieces of legislation, were combined into a single bill that passed the House March 19. The combined bill now awaits Senate approval before being sent to Gov. JB Pritzker.

Pritzker initially called for rate review authority over homeowners insurance last summer after Bloomington-based State Farm Insurance announced it was raising rates in Illinois an average 27.2%, citing losses it had incurred from weather-related disasters in the state.

Pritzker, however, questioned that rationale. He and legislative leaders suggested the company may have been shifting losses from disasters in other states onto Illinois consumers. He also used the controversy to highlight the fact that, unlike most other states, Illinois exercises no control over insurance premiums and has no law prohibiting excessive, inadequate or unfairly discriminatory rates in the insurance industry.

Separately, Secretary of State Alexi Giannoulias has been pushing for reforms in the automobile insurance sector, arguing insurance companies were setting rates based on factors such as a person's credit rating that have little or nothing to do with their driving record.

Neither bill made it through the General Assembly in 2025. A bill regulating homeowners insurance passed the Senate during the fall veto session in October but failed on the floor of the House just before lawmakers adjourned.

Product of negotiations

The bill that emerged in the House last week was the product of continued negotiations among lawmakers and the governor's office, although the insurance industry says it still opposes the final product.

Senate Bill 1486, as amended by the House, would prohibit companies from charging "excessive, inadequate or unfairly discriminatory" rates for auto and homeowners insurance. And, starting July 1, 2027, it would require them to give consumers at least 60 days' notice before raising premiums 10% or more.

It would also establish a procedure for the Insurance Department to review and approve new rate filings after July 1, 2027. Although companies would still be allowed to file new rates and begin collecting premiums under those terms immediately, the department would have authority to review those rates.

If the agency finds them to be excessive, inadequate or unfairly discriminatory, it would notify the company, which could then request an administrative hearing. If, after the hearing, the agency still finds the rates excessive, it could reject the rate filing. It would also have the authority to order the company to rebate customers for any excessive premiums it collected.

The bill would also prohibit the practice of "cost-shifting" by requiring companies to use "credible, state-specific" data in setting rates whenever such data is available and statistically reliable.

"This legislation is important to home and car owners of Illinois who are struggling with increasing insurance rates," Rep. Thaddeus Jones, D-Calumet City, the bill's chief House sponsor, said during floor debate.

Insurance industry concerns

Rep. Jeff Keicher, R-Sycamore, who works as an insurance agent, said the new bill was an improvement over earlier versions. But he said it does not address the factors that he said are the real causes of rising premiums — the rising frequency of catastrophic weather events and the proliferation of "storm chasers" who exploit those events for their own profit, at the expense of insurance companies.

"Those storm chasers are driving additional insurance claims and additional costs," he said. "We continue to see lawsuits filed for dubious reasons that continue to drive costs."

Keicher and a number of other lawmakers who work in the insurance industry abstained from voting on the bill. It passed 66-40 and will next be sent to the Senate. It was not immediately clear how quickly the Senate would take up the bill.

The Illinois Insurance Association, the American Property Casualty Insurance Association and the National Association of Mutual Insurance Companies issued a joint statement following the House vote saying the bill represented "one of the most sweeping and harmful insurance regulatory overhauls in state history" and that it would end up harming Illinois consumers.

"Illinois families are already facing an affordability crisis with property taxes, gas, grocery, and utility bills all rising," the organizations said. "Inflation is squeezing household budgets from every direction. At a moment when lawmakers should be laser-focused on affordability, the General Assembly is instead advancing radical legislation that would make both auto and homeowners' insurance more expensive for nearly every Illinois household."