Business

Illinois Secretary of State Launches Campaign to End ‘Unfair and Discriminatory’ Car Insurance Rate Practices

Illinois Secretary of State Alexi Giannoulias announced an advocacy campaign Wednesday aimed at ending the practice of insurance companies using socioeconomic data — such as credit scores and ZIP codes — to set car insurance rates.

The Illinois Secretary of State’s Office announced a series of town hall meetings, and a website, to gather stories from residents about their experiences with “skyrocketing rates” and “unfair and discriminatory ratemaking practices,” Giannoulias said during a news conference.

“Currently, insurance companies use a number of factors to determine your premium, including several that have nothing to do with your driving record,” Giannoulias said. “The horrible, hard truth is that car insurance companies charge you more for auto insurance based on your credit rating, the neighborhood you live in and your age.”

Upcoming town hall meetings are scheduled on the following dates, with more time and location details to be shared on the Illinois secretary of state’s website.

• Aug. 20 – Chicago, South Side
• Aug. 26 – South Suburbs
• Sept. 3 – Metro East
• Sept. 17 – Champaign
• Sept. 22 – Chicago, West Side
• Sept. 24 – Peoria
• Oct. 1 – Rockford
• Oct. 15 – Springfield

The public input gathered from the campaign will inform legislation set to be filed in the next General Assembly session, according to a news release. Previous attempts at legislation to address car insurance ratemaking practices have fallen short, including a scaled-down proposed bill to conduct a study on the issue.

The Illinois Insurance Association, American Property Casualty Insurance Association and National Association of Mutual Insurance Companies said in a Tuesday joint statement, “Insurers are not permitted to use and do not use factors like race, income, religion, and/or ethnicity in setting rates. This is true in Illinois and in every state.”

The insurance association organizations defended the criteria used to determine insurance rates, saying in the statement, that “allowing insurers to continue using a wide set of objective criteria to determine risk and set rates will ensure this market can continue to flourish.”

“We oppose efforts to limit the actuarial process that has driven companies out of other large states and led to increased premiums for the majority of policy holders,” the statement continued.

State Rep. Rita Mayfield (D-Waukegan), who serves on the House Committee for Insurance, said previous attempts to pass legislation addressing the criteria used to set auto insurance rates have been thwarted by insurance industry lobbyists, along with a “very pro-industry” insurance committee makeup.

In addition, Illinois is one of two states that doesn’t require prior rate review to protect insurance customers from “excessive or unfair rates,” according to Giannoulias.

In Illinois, vehicle owners are required to buy auto insurance.

“Safe drivers in Illinois are paying the price for a system that is rigged against them,” Giannoulias said, adding he’s heard from residents describing how they’ve received lower car insurance rates after moving to a neighboring ZIP code or registering a car in the suburbs.

“When it comes to car insurance rates, it should be based on driving record,” Giannoulias said. “It’s almost a double punishment if you live in a poorer neighborhood, and you wanna climb the economic ladder, you’re getting punished twice for living in a tougher neighborhood.”

The launch of the campaign comes after Gov. JB Pritzker called for more transparency and regulations on insurers earlier this month after the Bloomington-based insurance company State Farm increased home insurance rates in Illinois.

Illinois is home to one of the most competitive insurance markets in the country, according to insurance association organizations, with more than 200 companies offering insurance policies.

Home and car insurance giants State Farm and Allstate are headquartered in Illinois.

Contact Eunice Alpasan: [email protected]

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