For the first time in more than 50 years, auto and homeowners insurers will be required to file insurance rates with the Illinois Department of Insurance. Illinois was one of the only states engaging in open competition, which it has done since 1971.
On May 27, 2026, the Illinois General Assembly passed two major consumer protection bills that fundamentally reshape the state’s regulatory authority over auto and homeowners insurance pricing. The legislation empowers the Illinois Department of Insurance to review rate filings and reject premiums deemed excessive or unfairly discriminatory, marking a significant shift toward greater state oversight of the auto and homeowners insurance market. Illinois Governor J.B. Pritzker is expected to sign both bills mandating rate regulation over auto and homeowners insurance pricing.
Key Provisions
Auto Insurance (SB714). Senate Bill 714 grants the Illinois Department of Insurance authority to review rate filings submitted by auto insurers and to reject rate increases that are deemed unfair. Under SB714, insurers are required to provide customers with at least 30 days’ advance notice before implementing any rate increase exceeding 10%.
Homeowners Insurance (HB4273). House Bill 4273 empowers regulators to ensure that home insurance premiums are not “excessive, inadequate, or unfairly discriminatory.” Companies must provide policyholders with at least 60 days’ notice before raising renewal premiums by more than 10%.
Prohibition on Cost-Shifting. Both bills include a provision prohibiting insurers from unfairly shifting the costs of natural disasters or severe losses occurring in out-of-state locations onto Illinois consumers. This measure is designed to ensure that Illinois policyholders are not bearing the financial burden of catastrophic events that have no connection to their coverage territory.
Rebates for Overcharged Premium. The bills also allow the Illinois Department of Insurance to require insurers to retroactively refund customers for the premium paid during the time the rates were in effect if the rates are deemed excessive, after notice and hearing.
Effective Date
Once enacted, the legislation takes effect on new rate filings and renewal notices on July 1, 2027. Insurers writing auto or homeowners policies in Illinois should begin evaluating their rate-filing processes and renewal notice procedures well in advance of that date to ensure compliance.
Implications for Insurers
Insurers operating in the Illinois market should consider the following steps in light of this legislation:
- Review their current rate-filing procedures to ensure they can accommodate regulatory review and potential rejection of proposed rate increases.
- Evaluate their systems for generating advance notice to policyholders, confirming that the required 30-day (auto) or 60-day (homeowners) notice periods can be met for increases exceeding 10%.
- Assess whether any portion of their current rate structures reflect out-of-state catastrophic losses that could be challenged under the new cost-shifting prohibition.
- Monitor how the Illinois Department of Insurance implements regulations or guidance that may further define the standards for “excessive” or “unfairly discriminatory” premiums.
Conclusion
This legislation represents a meaningful expansion of regulatory authority over insurance pricing in Illinois. Insurers with exposure in the state should act promptly to assess the operational and financial impacts of these new requirements and ensure full compliance ahead of the effective date of July 1, 2027. We will continue to monitor developments related to this legislation, including any gubernatorial action and subsequent rulemaking by the Illinois Department of Insurance.