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1 | AN ACT concerning regulation. | |||||||||||||||||||
2 | Be it enacted by the People of the State of Illinois, | |||||||||||||||||||
3 | represented in the General Assembly: | |||||||||||||||||||
4 | Section 1. This Act may be referred to as the Motor Vehicle | |||||||||||||||||||
5 | Insurance Fairness Act. | |||||||||||||||||||
6 | Section 5. The Illinois Insurance Code is amended by | |||||||||||||||||||
7 | adding Section 143.19.4 as follows: | |||||||||||||||||||
8 | (215 ILCS 5/143.19.4 new) | |||||||||||||||||||
9 | Sec. 143.19.4. Motor vehicle insurance fairness. | |||||||||||||||||||
10 | (a) Definition. As used in this Section, "proceeding" | |||||||||||||||||||
11 | includes the filing of any rate, rule, or form and any | |||||||||||||||||||
12 | rulemaking conducted pursuant to this Section. | |||||||||||||||||||
13 | (b) Prohibitions; refusal to insure. | |||||||||||||||||||
14 | (1) No insurer shall refuse to issue or renew a policy | |||||||||||||||||||
15 | of automobile insurance, bond, or any other insurance | |||||||||||||||||||
16 | based on the ownership or operation of a motor vehicle | |||||||||||||||||||
17 | based in whole or in part on any of the prohibited | |||||||||||||||||||
18 | underwriting and rating factors set forth in subsection | |||||||||||||||||||
19 | (c), or use those factors to determine the terms of | |||||||||||||||||||
20 | coverage or placement in a particular affiliate within an | |||||||||||||||||||
21 | insurance company group. | |||||||||||||||||||
22 | (2) Classification plans, rating plans, rating tier |
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1 | placement factors, scoring models, rules, rates, premiums, | ||||||
2 | or any other method of establishing the premium to be paid | ||||||
3 | by an automobile insurance policyholder or covered driver, | ||||||
4 | and the modification thereof, based in whole or in part on | ||||||
5 | any of the prohibited underwriting and rating factors in | ||||||
6 | subsection (c) are unfairly discriminatory. | ||||||
7 | (c) Prohibited factors. With respect to underwriting and | ||||||
8 | rating a policy of automobile insurance, the use of the | ||||||
9 | following factors shall be prohibited: | ||||||
10 | (1) sex or gender; | ||||||
11 | (2) marital status; | ||||||
12 | (3) race; | ||||||
13 | (4) creed; | ||||||
14 | (5) national origin; | ||||||
15 | (6) religion; | ||||||
16 | (7) age; | ||||||
17 | (8) employment or occupation; | ||||||
18 | (9) education level attained; | ||||||
19 | (10) home ownership; | ||||||
20 | (11) consumer credit information or other credit-based | ||||||
21 | score; | ||||||
22 | (12) the absence of prior insurance; | ||||||
23 | (13) the amount or provider of prior insurance | ||||||
24 | coverage; | ||||||
25 | (14) any measure of a consumer's price elasticity of | ||||||
26 | demand; |
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1 | (15) the zip code, or any territorial designation | ||||||
2 | geographically smaller than the zip code, in which the | ||||||
3 | policyholder resides; and | ||||||
4 | (16) the level of income or wealth. | ||||||
5 | (d) Years of driving experience. Notwithstanding item (7) | ||||||
6 | of subsection (c), an insurer may consider the number of years | ||||||
7 | of driving experience of an applicant for the purposes of | ||||||
8 | underwriting and rating. | ||||||
9 | (e) Territory or any other geographical characteristic. | ||||||
10 | Territory or any other geographical characteristic shall not | ||||||
11 | be considered for the purposes of underwriting a policy of | ||||||
12 | automobile insurance, including, but not limited to, any | ||||||
13 | decision to sell, refuse to sell, cancel, or non-renew, and | ||||||
14 | the terms of the policy of automobile insurance. | ||||||
15 | Notwithstanding item (15) of subsection (c), an insurer may, | ||||||
16 | for rating purposes, use a territorial factor that is not | ||||||
17 | prohibited if the territorial factor does not have more than a | ||||||
18 | 25% impact on the premium that would otherwise be charged. | ||||||
19 | (f) Prohibited business practices. Every insurer selling a | ||||||
20 | policy of automobile insurance in Illinois shall demonstrate | ||||||
21 | that its marketing, underwriting, rating, claims handling, | ||||||
22 | fraud investigations, and any algorithm or model used for | ||||||
23 | those business practices do not disparately impact any group | ||||||
24 | of customers based on race, color, national or ethnic origin, | ||||||
25 | religion, sex, sexual orientation, disability, gender | ||||||
26 | identity, or gender expression. |
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1 | (g) Prior approval of rates. | ||||||
2 | (1) No rate shall be approved or remain in effect that | ||||||
3 | is excessive, inadequate, unfairly discriminatory, or | ||||||
4 | otherwise in violation of this Section. In considering | ||||||
5 | whether a rate is excessive, inadequate, or unfairly | ||||||
6 | discriminatory, no consideration shall be given to the | ||||||
7 | degree of competition, and the Director shall consider | ||||||
8 | whether the rate mathematically reflects the insurance | ||||||
9 | company's investment income. | ||||||
10 | (2) Every insurer that desires to change any rate | ||||||
11 | shall file a complete rate application with the Director. | ||||||
12 | A complete rate application shall include all data | ||||||
13 | necessary to justify the proposed rate and such other | ||||||
14 | information as the Director may require. The applicant | ||||||
15 | shall have the burden of proving that the requested rate | ||||||
16 | change is justified and meets the requirements of this | ||||||
17 | Section. | ||||||
18 | (3) The Director shall notify the public of any | ||||||
19 | application by an insurer for a rate change. The | ||||||
20 | application shall be deemed approved 60 days after public | ||||||
21 | notice unless: | ||||||
22 | (A) the Director disapproves the application; | ||||||
23 | (B) a consumer or the consumer's representative | ||||||
24 | requests a hearing within 45 days after the public | ||||||
25 | notice and the Director grants the hearing, or the | ||||||
26 | Director determines not to grant the hearing and |
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1 | issues written findings in support of that decision; | ||||||
2 | or | ||||||
3 | (C) the Director, on the Director's own motion, | ||||||
4 | determines to hold a hearing. If the proposed rate | ||||||
5 | adjustment exceeds 7% of the then-applicable rate for | ||||||
6 | personal lines insurance or 15% for commercial lines | ||||||
7 | insurance, then the Director must hold a hearing upon | ||||||
8 | a timely request. If the application is incomplete or | ||||||
9 | otherwise subject to disapproval, then the Director | ||||||
10 | may extend the application review process by up to 60 | ||||||
11 | days with the agreement of the applicant. | ||||||
12 | (h) Right of the public to inspect rates. All information | ||||||
13 | provided to the Director pursuant to this Section shall be | ||||||
14 | available for public inspection. | ||||||
15 | (i) Right of the public to participate. | ||||||
16 | (1) Any person may initiate or intervene in any | ||||||
17 | proceeding permitted or established pursuant to this | ||||||
18 | Section and challenge any action of the Director under | ||||||
19 | this Section. | ||||||
20 | (2) The Director or a court shall award reasonable | ||||||
21 | advocacy and witness fees and expenses to any person who | ||||||
22 | demonstrates that the person represents the interests of | ||||||
23 | consumers and that the person made a substantial | ||||||
24 | contribution to the adoption of any order, regulation, or | ||||||
25 | decision by the Director or a court. Where such advocacy | ||||||
26 | occurs in response to a rate application, the award shall |
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1 | be paid by the applicant. | ||||||
2 | (h) Rules. | ||||||
3 | (1) The Department shall, no later than 90 days after | ||||||
4 | the effective date of this amendatory Act of the 104th | ||||||
5 | General Assembly, adopt rules that guide the filing and | ||||||
6 | approval of rates, rules, and forms pursuant to this | ||||||
7 | Section. The Director shall develop formulas for | ||||||
8 | evaluating rates and any rules or forms that impact rates | ||||||
9 | that will be used to determine whether to approve or | ||||||
10 | disapprove any filing. | ||||||
11 | (2) Until the rules described in paragraph (1) take | ||||||
12 | effect, no insurer may file for a change in any rate, rule, | ||||||
13 | or form that would result in a rate increase. If, before | ||||||
14 | the adoption of the rules described in paragraph (1), an | ||||||
15 | insurer asserts that it would not be able to earn a | ||||||
16 | reasonable rate of return without an increase, then it may | ||||||
17 | request a hearing. If it is determined after a hearing | ||||||
18 | that a rate increase is needed to earn a reasonable rate of | ||||||
19 | return, then the insurer shall be allowed to make a change | ||||||
20 | that affords it the minimum increase required to earn a | ||||||
21 | reasonable rate of return. | ||||||
22 | (3) The Department shall, no later than 180 days after | ||||||
23 | the effective date of this amendatory Act of the 104th | ||||||
24 | General Assembly, adopt rules that implement the testing | ||||||
25 | of insurer business practices for compliance with this | ||||||
26 | Section. |
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1 | (j) Fees. All insurers subject to the provisions of this | ||||||
2 | Section shall be assessed a fee of 0.05% of their total earned | ||||||
3 | premium from the prior calendar year. The fee shall be payable | ||||||
4 | to the Department no later than July 1 of each calendar year | ||||||
5 | and shall be used by the Department to implement the | ||||||
6 | provisions of this Section. |