Illinois Secretary of State releases study on insurance industry ratemaking practices
Illinois Secretary of State Alexi Giannoulias releases a study that details how auto insurance companies are using non-driving factors to increase costs for Illinois drivers.
“This study puts hard data behind what Illinois drivers have been experiencing for years — pricing practices that can penalize people for factors beyond their control,” said Giannoulias in a press release. “When safe drivers are paying more because of factors entirely unrelated to their driving record, it raises serious questions about fairness and transparency in the system.”
The study compiled nearly 2,000 responses from Illinois residents and found drivers with poor credit can pay premiums that are 2.7 times higher for the same coverage as those with excellent credit, according to the release.
Seniors also faced higher rates despite safe driving records, with premiums increasing after age 65, the study found.
Drivers in certain ZIP codes also pay rates that are more than 2.5 times higher than those in other parts of the state, even when all other factors remain the same, the release says. It adds that compounded factors, meaning older drivers with lower credit and living in a higher-cost ZIP code, may pay dramatically more for identical coverage.
Many respondents also reported significant rate hikes despite having clean driving records, with increases tied to life events such as aging, financial hardship, or moving to a different neighborhood.
“These findings validate what Illinois families have been telling us for months,” said State Sen. Ram Villivalam (D-District 8) in the release. “Insurance pricing should be rooted in fairness and actual risk — not policies that disproportionately burden working families and seniors.”
Last year, Giannoulias launched a statewide campaign focused on preventing changes to residents’ insurance rates based on socioeconomic data compiled by insurance companies. The “Driving Challenge” campaign asked residents to share their stories about unfair or discriminatory ratemaking practices.
He launched the campaign soon after Illinois Gov. JB Pritzker created a stir in the state’s property and casualty insurance market in response to State Farm’s 27.2% homeowners’ insurance hike.
Pritzker’s comments pushed forward a series of legislation to battle property insurance rate increases.
SB 1486 has received the most attention and support, passing the House last month. It is currently moving through the Senate. The bill would create a rate review process for auto and homeowner’s insurance.
Giannoulias also recently sent an opinion piece to the media supporting the bill by saying it brings “long-overdue accountability to the insurance market.”
“Illinois is currently an outlier,” the piece states. “In every other state, except for Wyoming and Illinois, regulators have the authority to stop excessive, inadequate, or unfairly discriminatory rates before they hit consumers’ wallets. Not here. Illinois requires drivers to purchase car insurance coverage, yet the state fails to provide the basic consumer safeguards that residents in almost every other state take for granted.”
He adds that the insurance industry is opposing efforts that would make coverage more affordable for Illinois families. He noted that insurance companies want a study completed by the University of Illinois’ Office of Risk Management and Insurance Research (ORMIR), which he said is funded by the insurance industry.
“Illinois doesn’t need more analysis,” Giannoulias writes. “We need action. A fairer, more transparent system would mean more accountability, safer roads, and greater justice. For countless Illinoisans — especially in communities where public transit isn’t available near home or work — a car is a necessity, not a luxury. But in Illinois, if you can’t afford insurance, you can’t drive.”
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