SB0268 104TH GENERAL ASSEMBLY

LRB104 08773 BAB 18827 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB0268

Introduced 1/24/2025, by Sen. Michael E. Hastings

SYNOPSIS AS INTRODUCED:

215 ILCS 5/Art. XLVIII heading new
215 ILCS 5/1801 new
215 ILCS 5/1805 new
215 ILCS 5/1810 new
215 ILCS 5/1815 new
215 ILCS 5/1820 new
215 ILCS 5/1825 new
215 ILCS 5/1830 new
215 ILCS 5/1835 new
215 ILCS 5/1840 new
215 ILCS 5/1845 new

Creates the Insurance Fairness and Consumer Protection Law Article of the Illinois Insurance Code. Provides that insurers must submit a request for approval to the Department of Insurance for any proposed rate increase for homeowners insurance premiums or automobile insurance premiums. Prohibits implementing any rate increase without prior written approval of the Department. Prohibits using nondriving factors, such as credit score, occupation, and education level, to determine automobile insurance premiums. Provides that, for homeowners insurance, factors unrelated to the insured property's location, age, and condition shall not be considered in rate setting. Requires a public disclosure and comment period for any proposed rate increase exceeding 10% in a 12-month period. Prohibits an insurer from increasing premiums by more than 15% per year for any policyholder without exceptional justification, which must include specified evidence. Sets forth provisions concerning definitions; penalties; reimbursement of consumers; market conduct actions; Department approval of rate increases; and rulemaking. Effective immediately.

A BILL FOR

AN ACT concerning regulation.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Illinois Insurance Code is amended by adding Article XLVIII as follows:

(215 ILCS 5/Art. XLVIII heading new)

ARTICLE XLVIII. INSURANCE RATE FAIRNESS AND CONSUMER

PROTECTION

(215 ILCS 5/1801 new)

Sec. 1801. Short title. This Article may be cited as the Insurance Rate Fairness and Consumer Protection Law.

(215 ILCS 5/1805 new)

Sec. 1805. Purpose. The purpose of this Law is to limit unjustified increases in homeowners and automobile insurance premiums, ensure transparency in rate-setting practices, and grant the Department of Insurance greater oversight authority to protect consumers.

(215 ILCS 5/1810 new)

Sec. 1810. Definitions. As used in this Law:

"Department" means the Department of Insurance.

"Director" means the Director of Insurance.

"Insurer" means an insurance company offering homeowners insurance policies or automobile insurance policies within the State.

(215 ILCS 5/1815 new)

Sec. 1815. Prior approval requirement for rate changes.

(a) Insurers must submit a request for approval to the Department for any proposed rate increase for homeowners insurance premiums or automobile insurance premiums.

(b) The Department shall review the rate request within 60 days after submission.

(c) If the Department does not make a determination within the 60-day review period, the request shall be deemed denied until further review.

(d) Insurers shall not implement any rate increase without prior written approval from the Department.

(e) An insurer that submits false or misleading information in a rate request shall be subject to an immediate penalty of $100,000 per offense and mandatory audits by the Department for the next 3 years.

(f) This Section is operative on and after January 1, 2026.

(215 ILCS 5/1820 new)

Sec. 1820. Limitation on nondriving factors in automobile insurance rate setting.

(a) Insurers are prohibited from using nondriving factors, such as credit score, occupation, and education level, to determine automobile insurance premiums.

(b) For homeowners insurance, factors unrelated to the insured property's location, age, and condition shall not be considered in rate setting.

(c) The Department may impose civil penalties of up to $50,000 per violation on insurers that fail to comply with this Section.

(215 ILCS 5/1825 new)

Sec. 1825. Public disclosure and comment period.

(a) For any proposed rate increase exceeding 10% in a 12-month period, the insurer must publish a public notice, including a detailed justification for the increase.

(b) A 30-day public comment period shall follow the publication of the notice, during which consumers may submit comments or objections to the proposed rate increase.

(c) The Department shall consider public feedback when making a final determination regarding the proposed rate increase.

(d) Failure to publish the notice shall result in automatic denial of the rate increase and a fine of $250,000.

(215 ILCS 5/1830 new)

Sec. 1830. Rate increase limitations.

(a) No insurer shall increase premiums by more than 15% per year for any policyholder without exceptional justification.

(b) Exceptional justification must include evidence of increased claims related to natural disasters, regulatory changes, or unforeseen market shifts.

(c) The Department shall have sole discretion to determine whether the exceptional justification is valid.

(d) Unauthorized increases exceeding the limitation on premium increases under subsection (a) shall result in: (1) the insurer fully reimbursing affected policyholders plus 25% of the reimbursement amount; and (2) a fine of $500,000.

(215 ILCS 5/1835 new)

Sec. 1835. Regular market conduct examinations.

(a) The Department shall conduct market conduct examinations of insurers at least once every 3 years to ensure compliance with this Law.

(b) Examinations shall assess the fairness of rate-setting practices, transparency of filings, and adherence to approved rates.

(c) The Department may issue corrective actions, fines, or sanctions for violations discovered during market conduct examinations.

(d) Insurers found in repeated noncompliance of this law shall be fined $1,000,000 and may have their license to operate suspended for up to 12 months.

(215 ILCS 5/1840 new)

Sec. 1840. Penalties and enforcement.

(a) Insurers that implement unapproved rate increases or fail to comply with this Law shall be subject to fines up to $250,000 per violation.

(b) In cases of repeated violations of this Law, the Department may suspend or revoke an insurer's license to operate in Illinois.

(c) Policyholders affected by unapproved rate increases shall be entitled to reimbursement of any overpaid premiums plus an additional 30% penalty paid by the insurer.

(215 ILCS 5/1845 new)

Sec. 1845. Rulemaking authority. The Department may adopt rules necessary to implement and enforce the requirements of this Law.

Section 99. Effective date. This Act takes effect upon becoming law.