The tragedy of the California wildfires continues to unfold in what will undoubtedly be a long recovery for many homeowners as they navigate the process of rebuilding — and the bureaucracy of their insurance companies. As we’ve seen even at home in Illinois, none of us is protected from devastation of natural disasters. Yet for insurance companies in our state, steep increases aren’t always the result of a flood, tornado or other unexpected events.
Illinois homeowners and drivers are increasingly blindsided with unwelcome news from their insurance companies that their homeowner and auto premiums are going up — in some cases, by double-digit percentages.
Insurance companies regularly raise their rates, often with no prior insurance claim or other unforeseen event to warrant them. This leaves families scrambling to find extra money they need to cover the increase, posing difficult decisions for those already struggling with the rising costs of everyday living.
The General Assembly must prioritize two solutions this spring. The first is the Insurance Rate Fairness and Consumer Protection Act, which would limit excessive rate hikes and protect consumers from arbitrary pricing practices.
This bill that I have sponsored would require insurers to seek approval from the Illinois Department of Insurance before raising premiums. If the department does not approve the increase within 60 days, the insurer cannot implement the hike. Additionally, rate increases will be capped at 15% per year, unless the insurer can provide exceptional justification — such as increased claims from natural disasters or changes in the regulatory landscape.
It would also prohibit insurers from considering factors that aren’t relevant, such as credit score, occupation or education level, when setting auto insurance rates, ensuring that premiums are based solely on factors that directly relate to the coverage being provided. Homeowners insurance rates would also be restricted to factors directly related to the property itself, such as location, age and condition. By removing these nonrelevant factors, we could create a more equitable insurance market that doesn’t penalize consumers for things beyond their control.
If an insurer attempts to implement an unapproved rate increase, the bill would ensure policyholders are entitled to a refund of the overpaid premiums, plus an additional 25% compensation. Insurers that violate the rules would face substantial fines, and the Department of Insurance would have the authority to take corrective actions to protect consumers.
Another bill, the Insurance Rate Transparency Act, would ensure consumers are fully informed about the cost of their insurance policies before they are forced to renew to address the many people who are caught unaware until their renewal notices arrive with dramatic premium increases.
The bill would require transparency so that consumers can shop around for the best deal when faced with rising costs. Insurance companies would be required to publicly disclose year-over-year premium rate changes on their websites, a clear summary in all renewal notices, percentage increases (or decreases) in premiums for the last five years and a breakdown of what contributed to those changes. In addition, insurers would need to explain why rates have gone up or down, making it easier to understand the factors at play.
These pieces of legislation aren’t just about regulating an industry — they’re about protecting working people. When homeowners and drivers see their premiums jump by large amounts with no explanation or justification, they are left vulnerable and confused. For many, insurance is a nonnegotiable necessity, but it shouldn’t come at the expense of putting food on the table or paying for medicine.
Illinois families should no longer be left in the dark about rate changes, nor be at the mercy of arbitrary and excessive price hikes. It’s time for Illinois to lead the way in protecting consumers from the growing financial burden of insurance rate increases.
State Sen. Michael E. Hastings represents the 19th District.
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