Legislation would lead to higher insurance premiums for homeowners

Illinois families are feeling financial pressures â€" from groceries to utilities to property taxes â€" as the cost of everyday life keeps climbing. Homeowners’ insurance is not immune. Severe weather events, rising construction costs and broader inflationary pressures have pushed claims and expenses up across the country â€" not just in Illinois.

Yet Illinois’ insurance market has helped blunt those pressures by keeping coverage available and competitive. For more than 50 years, Illinois has benefited from one of the most open and competitive insurance markets in the nation. More than 200 insurers actively compete for business here, and despite having more hail damage claims than any state except Texas, Illinois remains competitive nationally in homeowners’ insurance rates. Competition works. It keeps prices stable and gives consumers choices.

That is why House Bill 3799 is the wrong bill at the wrong time for Illinois families.

At a moment when middle class households are already under enormous strain â€" with some Chicago neighborhoods seeing property tax increases of 50% from 2024 to 2025 and inflation driving up the cost of everyday essentials â€" HB 3799 would add yet another financial burden. Independent analysis by the National Association of Mutual Insurance Companies shows the bill could increase homeowners’ insurance premiums by 20%, costing the average household $230 more per year.

Supporters of HB 3799 argue that the bill will improve affordability. The opposite is true. The legislation moves Illinois toward a de facto prior approval rate system, similar to the regulatory structure in California â€" a system that has consistently produced higher premiums, fewer insurers and reduced competition.

When regulators suppress actuarially sound rates, insurers pull back, markets constrict and consumers pay more. This pattern has played out repeatedly in states that have adopted similar approaches.

Illinois already has meaningful oversight. Claims that insurers can raise rates without limits are simply false. Under current law, insurers must submit detailed actuarial documentation for any rate change, and the Illinois Department of Insurance reviews these filings. Rates must be justified and actuarially sound.

HB 3799, as amended by Senate amendments 2 and 3, would create a regulatory framework more extreme than what exists in any other state, injecting instability into a market that is currently functioning well. Major concerns include:

An unclear and unpredictable rate review process that combines “file and use” with “prior approval” â€" an untested hybrid model that could drive insurers out of the marketplace.

Unlimited and unpredictable retroactive refund demands, a risky and unproven mechanism that would create confusion and volatility.

No clear standard for a “complete filing,” allowing the Department of Insurance to delay filings indefinitely, leading to rate inadequacy and operational chaos.

Reduced competition, which historically leads to higher premiums and fewer choices for consumers.

Illinois should not adopt the most extreme regulatory model in the country, especially when our current system fosters market competition, which allows consumers to shop around for the coverage that best suits their needs and their budget. Limiting options and hiking rates for families already struggling with affordability is bad policy.

There are other, better options. Lawmakers have introduced more balanced proposals that would strengthen oversight without destabilizing the market. These alternatives would:

Reinstate standards ensuring rates are not excessive, inadequate or unfairly discriminatory.

Prohibit cost shifting between states.

Require notice to policyholders for rate increases above 10% due to non-contract factors.

Transition Illinois to prospective file and use, giving the Department of Insurance authority to disapprove rates before they take effect â€" without disrupting competition or availability.

These approaches would increase transparency and consumer protection while preserving the competitive market that has served Illinois well for decades.

We understand the financial pressure Illinois families are facing. Rising costs are real, and homeowners’ insurance is one piece of a much larger affordability puzzle. But HB 3799 is not the solution. It will raise costs, reduce competition and make it harder for homeowners to protect their property.

We urge lawmakers to reject HB 3799 in its current amended form. The Illinois Insurance Association stands ready to work with the General Assembly and the governor on responsible legislative language that increases transparency, protects consumers and keeps Illinois’ insurance market strong, stable and competitive.

• Kevin Martin is executive director of the Illinois Insurance Association in Springfield.