SB3827 104TH GENERAL ASSEMBLY

LRB104 20373 BAB 33828 b

104TH GENERAL ASSEMBLY
State of Illinois
2025 and 2026
SB3827

Introduced 2/6/2026, by Sen. Michael E. Hastings

SYNOPSIS AS INTRODUCED:

215 ILCS 5/Art. XLVIII heading new
215 ILCS 5/1802 new
215 ILCS 5/1805 new
215 ILCS 5/1810 new
215 ILCS 5/1815 new
215 ILCS 5/1820 new

Amends the Illinois Insurance Code. Creates the Rates for Fire and Extended Coverage Insurance Article. Provides that the Article applies to policies of fire and extended coverage insurance and establishes policies that are exempt from the Article. Provides that rates shall not be excessive, inadequate, or unfairly discriminatory, as specified. Requires each insurer to file with the Director of Insurance all rates and supplementary rate information for risks that are to be written in this State 20 days prior to the effective date of the rates. Sets forth provisions concerning filing requirements for insurers in competitive and noncompetitive markets and the monitoring duties of the Director concerning market competition and the availability of insurance for the policies of insurance to which the Article applies. Provides that a competitive market is presumed to exist for a line of insurance unless the Director, after a hearing, issues an order stating that a reasonable degree of competition does not exist in the market. Provides that the ruling of the Director regarding market competition is subject to judicial review under the Administrative Review Law. Effective January 1, 2028.

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. RATES FOR FIRE AND EXTENDED COVERAGE INSURANCE

(215 ILCS 5/1802 new)

Sec. 1802. Purpose. The purpose of this Article is to:

(1) Protect policyholders and the public against excessive, inadequate, or unfairly discriminatory rates.

(2) Promote price competition among insurers to provide rates that are responsive to competitive market conditions.

(3) Provide regulatory controls in the absence of competition.

(4) Maintain availability and reliability of insurance.

(5) Promote the dissemination of price and other information to enable consumers to purchase insurance suitable for their needs and to foster competitive insurance markets.

(215 ILCS 5/1805 new)

Sec. 1805. Applicability. This Article applies to policies of fire and extended coverage insurance, as defined in subsection (b) of Section 143.13 of this Code, to which Section 143.11 of this Code applies. This Article does not apply to the following:

(1) policies for any commercial liability and property insurance;

(2) policies for a structure, all or part of which is leased or rented, regardless of whether the insured occupied all or part of the structure as a primary residence;

(3) policies for a structure that is unoccupied and intended by the insured to be sold, leased, or rented or policies for a structure that is unoccupied and under active construction, renovation, or substantial improvement and that is intended by the insured to be sold, leased, or rented; and

(4) policies for a home or dwelling that is part of a farm policy, regardless of whether the insured owned the dwelling or occupied the dwelling as a primary residence.

(215 ILCS 5/1810 new)

Sec. 1810. Rate standards. Rates shall not be excessive, inadequate, or unfairly discriminatory.

(1) Excessive rates.

(A) A rate in a competitive market is not excessive.

(B) A rate in a noncompetitive market is excessive if it is likely to produce a profit that is unreasonably high for the insurance provided.

(2) Inadequate rates. A premium level is inadequate if it endangers the solvency of the insurer.

(3) Unfairly discriminatory rates. Unfairly discriminatory rates exist if, after allowing for practical limitation, the price differentials fail to reflect the difference in expected losses and expenses. A rate is not unfairly discriminatory if different premiums result for policyholders with similar loss exposures but different expenses, or similar expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.

(4) A rate is reasonable and not excessive, inadequate, or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk transfer.

(215 ILCS 5/1815 new)

Sec. 1815. Filings of rates and other rating information.

(a) Each insurer shall file with the Director all rates and supplementary rate information for risks that are to be written in this State 20 days prior to the effective date of the rates.

(b) In a competitive market, unless disapproved by the Director, a filing meets the requirements of this Article and becomes effective 20 days after its submission to the Director or sooner if approved by the Director.

(c) In a noncompetitive market as determined under subsection (b) of Section 1820, unless disapproved by the Director, a filing meets the requirements of this Article and becomes effective 60 days after its submission to the Director or sooner if approved by the Director.

(d) Insurers must adhere to filings made under this Section until the filings are amended or withdrawn.

(215 ILCS 5/1820 new)

Sec. 1820. Monitoring competition; determining competitive markets; hearing.

(a) The Director shall monitor competition and the availability of insurance for the policies of insurance to which this Article applies.

(b) A noncompetitive market shall only exist wherein, over a 3-year period, the Herfindahl/Hirschman Index (HII) consistently remains at 1800 or above, as determined through the annual cost containment report required under Section 1200 of this Code.

(c) A competitive market is presumed to exist for a line of insurance unless the Director, after a hearing, issues an order stating that a reasonable degree of competition does not exist in the market. The burden of proof in any hearing shall be placed on the party or parties advocating the position that competition does not exist. Any ruling that a market is not competitive shall identify the factors causing the market not to be competitive. Such order shall expire no later than one year after issue unless rescinded earlier by the Director or unless the Director renews the rule after a hearing and a finding as to the continued lack of a reasonable degree of competition. Any ruling that renews the finding that competition does not exist shall also identify the factors that cause the market to continue not to be competitive.

(d)(1) In determining whether a reasonable degree of competition exists within a line of insurance, the Director shall consider at least the following factors:

(A) the number of insurers actively engaged in writing coverage;

(B) market shares of the leading writers and the changes in market shares over a reasonable period of time;

(C) the existence of financial or economic barriers that could prevent new firms from entering the market;

(D) measures of market concentration and changes of market concentration over time;

(E) whether long-term profitability for insurers in the market is reasonable in relation to industries of comparable business risk; and

(F) the relationship of insurers' costs to revenue over a reasonable period of time.

(2) All determinations by the Director shall be made on the basis of findings of fact and conclusions of law.

(3) The ruling of the Director under this Section is subject to judicial review under the Administrative Review Law.

(e) The Director shall maintain by year whether the market is competitive as of December 31 of each year.

Section 99. Effective date. This Act takes effect January 1, 2028.