The Illinois House of Representatives has rejected a bill that would have expanded the Department of Insurance’s authority over rate filings and notification requirements for certain insurance rate increases.
House Bill 3799, which was opposed by industry groups, fell short of passage with 56 votes in favor, 37 against, and six lawmakers voting present, according to the legislative record.
A Senate amendment to the bill would have required insurers to notify both policyholders and the insurance department at least 60 days before implementing fire and extended coverage rate increases of more than 10%. The amendment also outlined standards for determining whether rates were excessive, inadequate, or unfair, and established hearing notification requirements.
The proposal included a requirement for carriers to use state-specific loss-experience data when setting rates, provided that data was available and reliable. If such data was not available, insurers could supplement with national, regional, or out-of-state loss-experience data.
Another amendment mandated that the insurance department notify carriers at least 60 days before objecting to any rate changes, with those actions subject to administrative law review.
Insurers with $100 million or more in annual premiums would have been required to make certain climate risk disclosures and participate in related data calls under the bill. The legislation was part of a broader effort prompted by Illinois Gov. JB Pritzker, following State Farm’s request for a 27.2% home insurance rate increase earlier in the year.
Pritzker argued that the company was relying on faulty catastrophe loss data and shifting out-of-state costs onto Illinois consumers.
State Sen. Michael Hastings (pictured above), who sponsored the Senate version, said the bill aimed to ensure fairness in insurance rates.
“If your property insurance is going up 30%, I don't think you should find out right when your renewal notices come in the mail,” Hastings said in an interview with Best Wire. He added that insurance companies should provide notice well in advance, since they are aware of rate changes ahead of time.
The Insurance Information Institute (Triple-I) recently released a report cautioning that legislative intervention in Illinois homeowners’ insurance could have unintended consequences for consumers.
The report warned that such measures might reduce both the affordability and availability of coverage in the state, even as premium increases have sparked debate among lawmakers and policyholders.
Triple-I’s analysis noted that while insurance costs are rising nationwide, Illinois homeowners’ insurance remains more affordable than the national average, and the market is nearly as accessible as in Utah, the most affordable state.
The American Property Casualty Insurance Association (APCIA), meanwhile, welcomed the House’s decision, stating the bill would have established a prior-approval system for rates not found elsewhere in the country.
The association said that, if passed, the legislation could have led to higher premiums, fewer choices for consumers, and market instability. An APCIA spokesperson noted, “Illinois' insurance market is among the most competitive in the nation, with more than 200 companies offering coverage and auto rates well below the national average.”
The spokesperson also cited research indicating that premiums in prior-approval states are about 20% higher than in states like Illinois.
