SPRINGFIELD, Ill. (WTVO) — The Illinois General Assembly is considering legislation that would put in place an oversight board to subject auto insurance companies to the same scrutiny as utility companies when it comes to rate hikes.
Rep. Will Guzzardi (D-Chicago) introduced House Bill 2203, the Motor Vehicle Insurance Fairness Act. Fifteen consumer, community, and civil rights groups are backing the legislation.
The authors of the bill argue that insurance companies raise rates based on a driver’s credit score, ZIP code, and gender.
According to The Chicago Sun-Times, Guzzardi said, “Every state except for Illinois and Wyoming has some mechanism for rate increases to undergo some kind of public scrutiny, so in Illinois, these rates can go up by whatever amount the insurance companies want without any measure of accountability or transparency.”
According to the Illinois Public Interest Research Group, auto insurers raised rates by more than $1.1 billion in 2022.
The National Association of Mutual Insurance Companies, American Property Casualty Insurance Association, and the Illinois Insurance Association issued a joint statement, saying “the bill claims to seek insurance accountability and fairness. Yet, if insurers are unable to utilize risk factors when determining rates, it will lead to a one-size-fits-all approach to pricing, eliminating competition in the marketplace, and ultimately driving prices up for all consumers.”
The trade group said the Illinois insurance market is competitive, with 230 companies offering auto policies, keeping rates 15.5% lower than the national average.
“To enforce the provisions of this legislation a massively expanded state bureaucracy to carry out these regulations will be necessary, the cost of which is also borne by consumers. The legislation will have exactly the opposite effect that the proponents seek,” statement read.
According to The Center Square, Kevin Martin, the executive director of the Illinois Insurance Association, said every state that requires companies to get approval for rate hikes has higher insurance premiums than Illinois.
“It just seems a little unusual to think that a consumer group would actually be trying to tout benefits for consumers when in reality what it will do is it will cost them a lot more money,” Martin said.