By WMBD TV
PEORIA, Ill. (WMBD) — Last summer, State Farm increased its home insurance rate by 27%, much to the outrage of Gov. JB Pritzker.
Fast forward to the last days of the Illinois Spring Session, state lawmakers passed two bills that now allow the Illinois Department of Insurance to deny any rate increase to auto and home insurance they deem unfair or discriminatory.
“Too many families have dealt with unexplained, unfair insurance price hikes on their homes and cars, so this legislation helps protect consumers while maintaining the core principles the Illinois business community is built on,” Pritzker said.
The proposals also require insurance companies to notify their consumers if the company increases its rates by 10%. That notification would be required 30 days prior if it’s auto insurance, or 60 days prior if it’s home insurance.
This comes after Country Financial, based in Bloomington, reduced its auto insurance rates in Illinois by 8%. However, home insurance rates could see another spike this summer, as severe weather consistently rises in Central Illinois.
A rise in severe weather usually means increased home insurance rates, according to a report done by the Chicago Sun Times.
State Rep. Sharon Chung has personally felt the cost of increased home insurance bills, but she still voted no on both plans. She said she’s worried this legislation could increase rates.
“We still have like the sixth lowest auto insurance rates in the entire country,” the Bloomington Democrat said. “If we’re trying to tinker with something that is already somewhat working, I’m afraid of some consequences that could happen that could actually lead to higher rates in the long term.”
While Pritzker fought for home insurance regulation, Secretary of State Alexi Giannoulias has been fighting for auto insurance regulation.
Giannoulias earlier in the year touted a study, done by O’Neil Risk Consulting & Algorithmic Auditing, that found Illinois insurance companies raise or lower rates based on ZIP code, credit score, and age.
So, when lawmakers finally passed the legislation he’s championed, Giannoulias said this is thanks to the efforts of thousands of Illinoisans, who decried their high auto insurance rates.
“Insurance companies are raking in record profits while Illinois families are choosing between their car insurance and groceries,” Giannoulias said. “Even safe drivers doing everything right are getting hammered with hike after hike. This bill finally gives Illinois the tools every other state, but one already has: the power to say no to unfair rates.”
Kevin Martin with the Illinois Insurance Association said in April that this proposal, which seeks to reduce insurance costs, would have the opposite effect.
Martin said using factors such as age and ZIP code can help reduce rates for drivers. If that were removed, then companies would be forced to raise rates, he said.
“The good driver is going to have to subsidize the bad driver,” he said.
Chung, whose district encompasses both State Farm and Country Financial’s headquarters, said she didn’t want to vote against companies that benefit her community.
“I’ve talked to a lot of people of how it’s afforded people a really great middle-class lifestyle here at Bloomington Normal. And I couldn’t do something that I felt like that could affect that,” she said.
Both bills passed mostly on partisan lines. They now head to the governor’s office, where he’s expected to sign them into law.
WMBD TV first reported this story. You can read the original story online at CIProud.com.
