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Illinois legislation proposes review process for auto insurance rate increases

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Insurance | Legal
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Two Illinois bills seek to create the Motor Vehicle Insurance Fairness Act, which would create a review process for car insurance rate increases in the state. 

HB4611, introduced by Rep. Will Guzzardi (D-District 39), and SB3213, introduced by Sen. Javier Cervantes (D-District 1), will be heard in the General Assembly’s Insurance Committee Monday. 

Illinois PIRG, a consumer advocacy group, reports insurance rates for top insurers in the state have risen by $2.4 billion since 2022. The group also reports the state, which headquarters State Farm and Allstate, is one of two states without a review process for insurance rate increases. 

“Last year, the General Assembly took an important step by empowering Illinois regulators to reject excessive health insurance rate hikes, and we appreciate Gov. Pritzker’s continued focus on consumer protection,” Cervantes said in a PIRG press release. “After two years of billions dollar rate hikes, it’s time to also tackle excessive car insurance rates, and the discriminatory practices that disproportionately impact communities like those I represent.”

The companion bills amend the Illinois Insurance Code to prohibit insurers from refusing to issue or renew a policy based in whole or in part on specific prohibited underwriting or rating factors, such as provisions concerning the use of territorial factors. 

It also prohibits any practices that disparately impact customers based on race, color, national or ethnic identity, religion, sex, sexual orientation, disability, gender identity, or gender expression. 

Any rate changes would require an application be filed with the Director of Insurance and all information should be available for public inspection. It also would allow the public to challenge any rate change request. 

Guzzardi filed a similar bill last year in the House. It never made it out of the Rules Committee after a review by it and the Insurance Policy Subcommittee. 

A consumer advocacy group in California, Consumer Watchdog, says an insurance review process in their state has saved consumers from $3 billion in auto insurance hikes since 2002

Throughout the nation, car insurance — which has increased 29% since 2018 — is expected to hike another 12.6% this year, according to a Value Penguin and Lending Tree study. It will be the most significant increase for car insurance since 2018, with 2023 seeing the second-largest increase at 11.2%.

Late last year, Allstate received double-digit rate increases in New York, New Jersey, and California after Wilson threatened to leave the states if the increases weren’t approved. During a recent Q4 earnings call, company executives said they planned to increase rates in at least 10 states in 2024. 

The insurer netted $1.5 billion in Q4, a 496% increase from the $303 million loss the insurer in Q4 2022. 

While Allstate had a profitable Q4, the company ended the year in the red with a $316 million loss. Yet, the company ended with a 77% increase from the $1.4 billion loss in 2022. 

A recent Wall Street Journal article said auto insurers have seen stocks jump as last year’s earnings roll stronger than in recent years. 

Progressive netted $1.9 billion in Q4 2023, a 141% increase from the $826.4 million the company netted in Q4 2022, according to the company’s December earnings release

The company’s net income for 2023 is $3.9 billion, more than a 400% increase from 2022. The company recorded $721.4 million of net income earned in 2022. The 2023 annual amount is unaudited. 

Last year, the company announced a plan for “aggressive” rate increases, increasing by 4% companywide during the first quarter. It raised rates by 13% in 2022. 

The WSJ article explores insurers’ delay when asking state governing bodies for premium increases. The increases often come years after the losses happen, the article says. 

For example, losses could happen during times of high inflation. Inflation could stabilize by the time insurers receive approval for rate increases and implement the changes on policyholders’ premiums. 

California Department of Insurance Deputy Commissioner Tony Cignarale was recently asked about the rising insurance rates while speaking at an open board meeting of the Society of Collision Repair Specialists (SCRS). The audience member noted repair shops are noticing an increase in consumer responsibility for out-of-pocket expenses due to short payments while the billpayers are simultaneously increasing their premiums.

Cignarale noted that DOIs tend to see more claim disputes as insurers look for ways to reduce costs while waiting for rate increase approvals. He said those disputes tend to slow down after premiums are increased. However, he said insurers could continue doing some cost-cutting practices they learned worked.


Photo courtesy of wellesenterprises/iStock

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