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Updated: Illinois bill for insurance rate review process stalls

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Insurance | Legal
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An Illinois bill that received support from the Secretary of State and would have created a review process for auto insurance rate increases stalled, failing to advance out of a House committee by the April 19 deadline. 

Secretary of State Alexi Giannoulias previously said he supported  HB4611 because it also would have prohibited any practices from insurers that disparately impact customers. This includes practices based on race, color, national or ethnic identity, religion, sex, sexual orientation, disability, gender identity, or gender expression. 

Giannoulias’ support was criticized by state Rep. Jeff Keicher (R-District 70) while in committee, according to Advantage News. Keicher, an insurance agent, said senior drivers would see an increase in their bills because of the law. 

The Secretary of State responded with a statement to Advantage News:

“When we learned people are paying more for car insurance based on their credit scores and zip codes, that sounds fundamentally discriminatory and unfair, but maybe there’s a good reason for it. So we reached out to insurance companies and asked, ‘What are the reasons why insurance rates are not based on the way they drive but where they live?’ We weren’t given satisfactory answers,” Giannoulias says in the article. “They also did not deny that people who live in poor neighborhoods are paying more.”

The article says insurance committee chair Rep. Thaddeus Jones (D-District 29), attempted to have a study completed on the impact of credit scores on insurance rates but was unable to get one finished for this session. 

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 Illinois, which headquarters State Farm and Allstate, is one of two states without a review process for insurance rate increases. 

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

Motor vehicle insurance is noted as one contributor to the consumer price index rising to 3.5% in March, according to a report released by the U.S. Bureau of Labor Statistics (BLS)

The BLS reports indexes that increased in March were shelter, motor vehicle insurance, medical care, apparel, and personal car. Indexes that decreased were used cars and trucks, recreation, and new vehicles. 

Auto insurance increased by 2.6% in March from February and a 22% increase from a year ago. Auto repair costs increased 1.7%, up 8.2% in a year. Gasoline costs also increased 1.7% in March with an annual increase of 1.3%. 

A Yahoo Finance report says auto insurance’s 22.2% annual increase is the largest since December 1976 when prices increased 22.4%. 

Insurers point to pandemic losses from part delays, rising labor costs, and used car values as causing the hiked rates in recent years. The rate hikes continually receive criticism from consumer advocacy groups who’ve claimed insurers are overstating needs and overburdening the consumer. 

As insurers raise premiums, collision repair shops have simultaneously noted an increase in consumer responsibility for out-of-pocket expenses due to short payments. 

An Oklahoma bill that would extend the state’s Corporation Commission’s ability to set towing and storage fees for non-consensually towed vehicles to include consensually towed vehicles was introduced by insurance agent Sen. Lonnie Paxton (R-District 23) in February.

The bill, SB1741, was passed by the Senate and moved to the House in March. It has remained in committee since March 25.

Insurance also remained one of the top industries that spent money on lobbying in 2023. It only trailed behind the pharmaceutical and electronics manufacturing industries, according to data released by Statista.


Photo courtesy of tacojim/iStock

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