Illinois auto insurance rate calculation overhaul in the works

Auto insurance - Rate Hikes - Illinois

State Rep. Will Guzzardi is seeking to ban “excessive” increases and price calculation factors.

Illinois state Rep. Will Guzzardi is seeking to require that auto insurance companies obtain state approval before they can implement rate hikes. He is also aiming to implement a ban for “excessive” rate increases and stop insurers from being able to use occupation, gender or credit score to calculate premiums.

The largest car insurers in the state have increased rates by $527 million since the start of the year.

According to analyses conducted by two consumer groups, the five largest auto insurance companies in the state have increased rates by $527 million since January 2023. This is on top of the $1.1 billion in rate increases implemented throughout 2022 by the 10 largest insurers in Illinois.

Auto insurance Rates - Climb - Analysis

The analyses were conducted by the Consumer Federation of America and the Illinois Public Interest Research Group nonprofit. They examined the rates changes from car insurers in Illinois this year, including Allstate, State Farm, Geico, Progressive and Country Financial. Combined, those insurers comprise 62 percent of the entire state market.

These auto insurance price increases are occurring as the state’s historically unrestricted regulations face criticism.

Aside from being able to implement rate hikes whenever they want and only needing to let state officials know what their plans are, insurers in Illinois are permitted to use factors that have nothing to do with driving or history behind the wheel to establish rates. These include factors such as occupation, gender, and whether a driver is a homeowner or renter.

According to a 2019 investigation conducted by the Chicago Sun-Times, the outcome of insurer practices in the state is disparities. For instance, a woman might pay more for coverage simply because of gender, regardless of driving record.

Illinois Rep. Will Guzzardi (D-Chicago) has now introduced legislation to address these practices and change some of the ways insurers do business in the state.

The auto insurance bill would require that insurers obtain state approval to increase rates. It would ban “excessive” rate increases. It would stop the use of occupation, age, marital status, gender, education, wealth, home ownership, credit scores or past relationships with auto insurers to calculate rates.

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