Pritzker signs bills allowing state to review insurance rate hikes
[August 05, 2026]
By Peter Hancock
SPRINGFIELD – Gov. JB Pritzker signed legislation Tuesday that will give
the Illinois Department of Insurance authority to review and approve
rate changes for homeowners and automobile policies.
“It’s not asking too much to say to insurance companies, if you’re
telling your customers that rate hikes are necessary, you should be able
to prove why,” Pritzker said at a bill signing ceremony in Chicago.
Prior to the bill signings, Illinois was one of only two states, with
Wyoming, that did not exercise regulatory control over insurance rates.
The new laws, which take effect July 1, 2027, prohibit companies from
charging “excessive, inadequate, or unfairly discriminatory” rates and
prohibit them from shifting the cost of losses in other states onto
Illinois consumers.
The new laws come a little more than a year after Illinois-based State
Farm announced it was raising homeowners insurance rates an average
27.2% statewide. They also come two years after Illinois motorists saw
an average 18% hike in their auto rates, according to Secretary of State
Alexi Giannoulias.
In both cases, insurance industry officials said the rate increases were
necessary due to inflation, the rising cost of repairs and, in the case
of homeowners insurance, the increasing frequency of extreme weather.
In addition, State Farm recently noted that auto insurance rates have
been falling in Illinois and that it lowered its premiums by an average
15% in 2025.
Insurance Department Director Ann Gillespie agreed there often are
legitimate reasons for rate increases. But she said the new laws will
help make sure that rate increases in the future are justified by
reliable data.
“While no state legislation can fully eliminate these impacts to
insurance premiums, these bills today hold insurance companies
accountable for addressing their cost increases by requiring rates to
reflect Illinois-specific losses and considerations,” she said.
House Bill 4273, the homeowners insurance bill, requires companies to
give their customers 60 days’ notice before raising premiums more than
10%.
It also requires them to use credible state-specific claims data to
develop their rates when it is available, but companies will be able to
supplement that data with national, regional or out-of-state data if
needed to meet actuarial standards of credibility.
Companies will still be able to charge new rates once they are filed
with the Insurance Department. But the new law gives the department
authority to review those rates and order rebates of any excess premiums
collected if the rates are found to be excessive or unfairly
discriminatory.
[to top of second column]
|
Mail from State Farm insurance. (Capitol News Illinois file photo)
Senate Bill 714, the auto insurance bill, requires companies to give
customers 30 days’ notice before raising premiums more than 10%. It also
gives the department authority to review rates and order rebates if the
rates are found to be excessive or unfairly discriminatory.
Giannoulias pushed for that bill, criticizing companies for basing rates
on factors unrelated to a person’s driving record, such as their credit
score or ZIP code. But while those practices are not specifically
prohibited in the final legislation, the new law does ban rates that are
“unfairly discriminatory.”
“For far too many Illinois families, the cost of mandatory auto
insurance has become absolutely unsustainable, forcing impossible
choices between paying for coverage and paying for life’s basic
necessities,” Giannoulias said at the bill signing ceremony. “That’s not
just a financial burden. It puts more uninsured drivers on the road and
makes our roads and communities less safe.”
Insurance industry organizations, however, remain opposed to the new
laws.
In a joint statement issued after the bill signing, the Illinois
Insurance Association, the American Property Casualty Insurance
Association and the National Association of Mutual Insurance Companies
warned the new laws will lead to higher costs and fewer choices in the
insurance market because they do not address the economic realities
behind premium increases.
“Instead, the laws impose a fundamental shift in Illinois’ regulatory
environment, moving the state toward a more rigid rate approval system
similar to struggling insurance markets like California,” the
organizations said. “This shift will make it harder for insurers to
respond in real time to market conditions and adjust rates up or down
based on actual claims experience.”
Pritzker, however, dismissed the industry’s criticism.
“It’s silly to suggest that this is going to raise rates across the
board,” he said. “What’s raising rates are when insurance companies are
simply putting out their bills that people can’t afford and that don’t
have any relationship to what’s actually happening on the ground.”
Capitol News Illinois is
a nonprofit, nonpartisan news service that distributes state government
coverage to hundreds of news outlets statewide. It is funded primarily
by the Illinois Press Foundation and the Robert R. McCormick
Foundation. |
