Illinois homeowners and drivers will soon receive more warning before a large insurance increase — and, for the first time, state regulators will be able to challenge rates they determine are excessive or unfair.
Gov. JB Pritzker signed two bills in August that change how Illinois regulates personal auto and homeowners insurance rates. Beginning July 1, 2027, insurers will have to justify their rates with actuarial data, and the Illinois Department of Insurance will have the authority to reject rates that don’t meet the state’s new standards.
Before these laws, Illinois was the only state that could not review or challenge homeowner and auto insurance rates. Insurers submitted rate information, but Illinois didn’t have rules against “excessive, inadequate, or unfairly discriminatory” rates.
Most other states base their property and casualty rating laws on this three-part rule. And the National Association of Insurance Commissioners includes these standards in its model laws.
“For too long, Illinois working families have been forced to pay higher insurance bills without receiving a clear explanation of why their rates went up,” Pritzker said in a statement announcing the signing of the bills.
“That changes today,” the statement continued. “These commonsense reforms will bring greater openness and accountability to the insurance industry while continuing to preserve the competitive market that has served Illinois consumers. At a time when families are feeling squeezed by rising costs, we are taking action to ensure Illinoisans receive a fair deal when protecting their homes and cars.”
Consumer and labor groups, such as Illinois PIRG, AARP Illinois, Citizen Action/Illinois, Housing Action Illinois, the Illinois AFL-CIO, and AFSCME Council 31, supported the new laws.
Illinois has now adopted several common regulatory features with the signing of these bills, including:
A statutory ban on “excessive, inadequate, or unfairly discriminatory” rates
Actuarial review of rate filings
Authority for the insurance department to disapprove noncompliant rates
Administrative hearings and judicial review for insurers
Refund authority when insurers have already collected a rejected rate
Detailed requirements for supporting data for rate filings
The laws don’t cap premiums or guarantee lower insurance bills. Insurers can still begin charging a new rate after filing it with the state. But regulators will be able to review that rate, order the insurer to stop using it, and potentially require rebates for affected customers.
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