Illinois should put consumers first on car insurance rate hikes

No driver wants to — or should — pay a higher price for auto insurance than is necessary. Lawmakers in our state have a chance to make sure that doesn’t happen, and it’s up to them to be smart about the details.

Under the proposed HB 2203, introduced last week by state Rep. Will Guzzardi and state Sen. Javier Cervantes, the state’s Department of Insurance would be given broad authority to regulate auto insurance rate hikes.

Hundreds of millions are at stake for Illinois drivers, who saw auto insurance premiums increase by more than $1.1 billion in 2022, the Illinois Public Interest Research Group reports. Insurers also racked up $896 million in excess profits during the first year of the pandemic — when driving declined, though insurers point out that unsafe driving and accidents increased.

Lawmakers must fully vet the proposal to make sure any new law helps consumers continue to benefit from robust competition among insurers.

For example, we see no reason why Illinois should continue to be one of a few states that does not prohibit insurance rates that are “excessive, inadequate or unfairly discriminatory.” The proposal would rightly fix that.

And like many consumers, we’re not convinced that nondriving factors — such as gender, credit score, type of job or income — should play a role in setting insurance premiums. Insurers point out that most states still allow the use of such socioeconomic factors. Driving history “is not the be-all, end-all,” Jeffery Brewer of the American Property Casualty Insurance Association told us.

Maybe not. But why should women, for instance, pay more for premiums than men, as the Sun-Times’ Stephanie Zimmerman reported back in 2019?

States have begun to ban the use of various socioeconomic factors in insurance pricing — ‘‘It’s an issue that’s flown under the radar until recently,” as Michael DeLong of the Consumer Federation of America told us.

Let insurers make their case to lawmakers on this front. If the evidence for this practice holds up to scrutiny, so be it. If not, Illinois should follow those other states’ lead.

Legislators should also tread wisely with two other provisions: giving the state authority to approve or reject rate hikes and to impose hefty fees on insurers — which will undoubtedly get passed on to customers — to fund implementation of the law. A dozen states now require prior rate hike approval, while others have lesser oversight, such as limits on rate hikes.

Illinois has a robust insurance marketplace now, with over 200 companies — the most of any state — doing business here. Rates have traditionally been below the national average, according to data from the National Association of Insurance Commissioners.

Our state should make sure rates remain as low — and fair — as possible.