Some looking for oversight of car insurance rates in Illinois

[June 05, 2023]  By Zeta Cross | The Center Square contributor

(The Center Square) – A consumer advocacy group says it’s time to give Illinois consumers some protection in the car insurance marketplace.

State Rep. Will Guzzardi, D-Chicago, is leading the effort to give the state some oversight over auto insurance rates.

Forty-eight other states have the authority to review, reject or modify excessive car insurance rate hikes, Abe Scarr, state director of Illinois Public Interest Research Group, told The Center Square. Illinois and Wyoming are the only states in the country that do not have the authorization to intervene on the consumer’s behalf when it comes to car insurer practices.

“In Illinois, car insurance companies can raise rates at any time, by any amount, without any regulatory oversight,” Scarr said. “We think this is wrong, especially considering that if you own a car, you are required by law to insure it.”
 

Guzzardi’s legislation, House Bill 2203, didn’t advance out of committee before the House adjourned last week. His measure would require automobile insurers to get prior state approval for rate hikes, ban “excessive” insurance increases and prohibit using gender, marital status, age, occupation or other factors in setting car insurance rates.

Kevin Martin, executive director of the Illinois Insurance Association, told The Center Square earlier this year if passed, the legislation will do the exact opposite of what it is designed to do.

“I think if this bill is passed and signed into law, Illinois will go from probably the premiere state for insurance companies to want to do business to by far the worst,” Martin said.

In order to raise car insurance rates in Illinois, insurers are only required to notify state officials when they intend to do so. Scarr said the other problem with car insurance in Illinois is the widespread practice of using non-driving factors in setting rates.

An investigation by the Chicago Sun-Times found that credit scores, home ownership and occupation are being used to charge some consumers higher car insurance rates, no matter how good their driving record is.

“A Consumer Reports analysis found that an Illinois driver with a clean driving record and a poor credit score will pay $862 more annually for car insurance than a driver with excellent credit and a conviction for driving while intoxicated,” Scarr said. “That is absurd. It is not the way we should be setting rates.”

Illinois PIRG is working with a coalition of a dozen groups to build support to give Illinois some oversight authority over car insurance.

“They raised rates by over $1 billion in 2022,” Scarr said. “So far in 2023, the top 5 companies by market share have raised rates by half a billion dollars.”

More legislators are recognizing how out of step Illinois is with the rest of the country when it comes to car insurance oversight, Scarr said.

“In an inflationary economy where people are feeling the pain in many ways, we believe we will start to build the power we need in Springfield to start advancing these reforms,” Scarr said.

Scarr urges people who believe they have been treated unfairly by their car insurers to contact him and to contact their legislators.

“Car insurance rates should be based on the overall risk and the overall cost, not factors that penalize people who may be good drivers but have the wrong attributes,” Scarr said.