Illinois Bill Means More Government, Not Lower Rates

Illinois consumers will see fewer options and higher prices should HB 4273 and SB 714, which were approved by state lawmakers today, become law.

“Giving the government absolute control over insurance rates will not solve the problem,” said Brian Christenberry, regional vice president for NAMIC. “HB 4273 and SB 714 only serve to create uncertainty in the marketplace by giving the state the ability to reject a rate filing – past, present, or future – as excessive, without defining why. Letting politicians set prices is never a good idea, and it will drive competition from the marketplace.”

The legislation would allow the state Department of Insurance to revisit and overturn past rate approvals, calling previously accepted rates “excessive” long after the fact, based on a broad, undefined authority to decide what qualifies as an “excessive” rate, without objective standards. It provides no timelines or due-process for insurers that request a hearing, opening the door to indefinite delays and inconsistent enforcement, and allows the state to mandate retroactive refunds based solely on its own decision.

Illinois has long been one of the nation’s most competitive marketplaces, and rates have remained around the national average even as losses have skyrocketed due to increasingly frequent severe weather and rising construction and replacement costs. The regulatory changes laid out in HB 4273 could cause homeowners’ premiums to increase by approximately 20 percent, or $230 on average, with a similar effect on auto insurance rates due to SB 714.

“Increasing state control over insurance underwriting doesn’t lower rates, because it doesn’t address the risks and costs drivers at the heart of the problem,” Christenberry said. “We’ve seen this approach in California, and it doesn’t work. HB 4273 and SB 714 would create an even worse regulatory system, likely with even worse results.”