After $1.1 billion in 2022 rate hikes, new legislation tackles excessive, unfair car insurance rates

Media Contacts
Abe Scarr

State Director, Illinois PIRG; Energy and Utilities Program Director, PIRG

Legislators, backed by a coalition of 15 consumer, community and civil rights organizations, introduced legislation Wednesday to protect Illinois drivers from excessive and unfair car insurance rates. The effort comes after Illinois car insurers made $896 million in excess profits during the first year of the pandemic and raised rates by more than $1.1 billion in 2022

The proposed legislation, HB2203, sponsored by state Rep. Will Guzzardi (39th District) in the House and state Sen. Javier Cervantes (1st District) in the Senate, would empower the Illinois Department of Insurance to reject or modify excessive rate hikes, and end the use of non-driving factors, such as credit scores, to set rates. 

“It’s time for the legislature to protect Illinois consumers and ensure fairness in our car insurance market,” said Rep. Guzzardi. “Discrimination is wrong, profiteering is wrong, and this bill will put an end to those practices in insurance rate-setting in Illinois.”

Even though Illinois requires every car owner to buy insurance, it is one of only two states that doesn’t protect insurance customers from excessive or unfair rates. Average Illinois car insurance rates increased by 18% in 2022, more than in all but one other state, according to analysis by Auto Insurance Report. 

Car insurers commonly use non-driving factors such as credit scores or zip codes in setting rates. This practice has well-documented discriminatory impacts. A 2017 ProPublica investigation found insurers charging 30% higher car insurance rates in majority Black zip codes compared to other areas with similar accident costs. 

“When taking my oath for office, I had a very clear agenda to protect my constituents and HB 2203 does exactly that,” said state Sen Javier Cervantes.  “It ensures that our communities and its people get treated fairly by eliminating geo social parameters to determine insurance rates.”

Car insurers’ use of non-driving factors also leads to absurd results. According to a Consumer Reports analysis, an Illinois driver with a clean driving record but poor credit will pay $862 more annually for car insurance than a driver with excellent credit and a conviction for driving while intoxicated.

Rate hikes are likely to continue in 2023. On January 18, Allstate filed its first Illinois car insurance rate hike in 2023 — a $63 million increase that will raise average customer premiums by $174 annually.  In December, its CEO has said, ““We may end up overshooting a bit, don’t know.” 

“It’s time to stop allowing car insurers to ‘overshoot’ with excessive rate hikes,” said Illinois PIRG Director Abe Scarr. “Illinois’ car insurance customers deserve the same basic consumer protections most Americans take for granted.”

After overcharging customers during the pandemic, Illinois’ major insurance companies rewarded top executives with generous bonuses. Bloomington-based State Farm dramatically raised CEO Michael Tipsord’s annual bonuses from $8.3 million in 2019 to $18.1 million in 2020 and $22.4 million in 2021. Northbrook-based Allstate boosted its stock price by buying back more than $3.3 billion in shares in 2021, the most in a single year since 2007.

State Farm and Allstate raised Illinois rates by the largest amounts in 2022, by $388 million and $229 million respectively.

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