If you own a car in Illinois, the state requires you to buy car insurance, but does not protect you from excessive or unfair rates. In fact, Illinois is one of only two states whose Department of Insurance has no power to reject or modify excessive car insurance rates. Illinois also allows insurance companies to unfairly base rates on who you are, using factors like credit scores and zip codes, rather than how safe a driver you are.
The pandemic highlighted Illinois’ lack of consumer protections: when so many of us sheltered in place and stopped commuting during the first year of the pandemic, the risks of driving went way down, but our car insurance rates did not go down in proportion. Over that year, Illinois insurance companies made close to a billion dollars in windfall profits by overcharging the Illinois customers by an estimated average of $99 per person.
After we got through the worst of the pandemic and started driving more, insurance companies like State Farm and Allstate aggressively raised rates: the top 10 insurers in Illinois raised rates by more than $1.1 billion in 2022 and are on track to raise rates by even more in 2023. The Allstate CEO even said, “We may end up overshooting a bit, don’t know.” In all but two states, when an insurer “overshoots,” consumers can demand refunds or lower rates – not in Illinois.
The problem is compounded when insurers base rates on factors that have nothing to do with how safe a driver you are. That can lead to unfair results: safe Illinois drivers with poor credit pay more than twice as much for insurance as safe drivers with excellent credit. It can also lead to absurd results: safe Illinois drivers with clean driving records and poor credit pay hundreds of dollars more for insurance on average than drivers with a drunk driving conviction and excellent credit.
Illinois needs to catch up to the rest of the country by giving the Department of Insurance basic tools to protect car insurance customers, like the power to reject or modify rate hikes, and end the unfair practice of using non-driving factors to set rates.
That won’t be easy: Illinois is home to insurance giants State Farm and Allstate. For years, they have wielded power in Springfield to stop any attempt to implement basic consumer protections.
But the time is right for change – last year the legislature passed similar reforms for health insurance, and after back to back years of billion dollar rate hikes, legislators will be looking for ways to lower costs for their constituents. Given the power of the insurance industry, it’s not going to be easy, but with your support, we can ensure Illinoisans enjoy the consumer protections they deserve when buying car insurance.
State Director, Illinois PIRG; Energy and Utilities Program Director, PIRG
Abe Scarr is the director of Illinois PIRG and is the PIRG Energy and Utilities Program Director. He is a lead advocate in the Illinois Capitol and in the media for stronger consumer protections, utility accountability, and good government. In 2017, Abe led a coalition to pass legislation to implement automatic voter registration in Illinois, winning unanimous support in the Illinois General Assembly for the bill. He has co-authored multiple in-depth reports on Illinois utility policy and leads coalition campaigns to reform the Peoples Gas pipe replacement program. As PIRG's Energy and Utilities Program Director, Abe supports PIRG energy and utility campaigns across the country and leads the national Gas Stoves coalition. He also serves as a board member for the Consumer Federation of America. Abe lives in Chicago, where he enjoys biking, cooking and tending his garden.