State Rep. Sharon Chung has introduced a bill she hopes will start a conversation between state lawmakers and insurance companies about regulatory oversight.
Chung is a Democrat who represents parts of Bloomington-Normal where State Farm and Country Financial have their headquarters. She filed the bill in response to a bill Gov. JB Pritzker backed last year that would have placed Illinois homeowners insurers under more strict pricing controls.
Chung said insurance companies were not part of the discussion when lawmakers crafted the bill that failed to pass during the recent veto session.
Chung’s bill would allow the Illinois Department of Insurance to approve or stop a rate change by an insurance company. Illinois does not currently have authority to regulate insurance rates.
The bill clarifies the requirements insurance companies need to meet to get approval on a rate change and does not require any reimbursement if the rate is denied.
Pritzker lobbied lawmakers last year for tougher regulations against insurers after State Farm increased property insurance rates by 27%. Illinois lawmakers introduced a bill to regulate and verify rate increases by insurance companies.
During the veto session, lawmakers added amendments requiring insurance companies to give rebates to customers if the Department of Insurance finds insurance companies overcharging customers. Insurance companies then turned against the bill and it stalled in the House.
Chung said Pritzker’s bill would make Illinois’ market less competitive and there needs to be more conversations with insurance companies to come to a compromise. She adds that part of the reason for the rate increase is because of climate change and extreme weather. Illinois saw a record number of tornadoes last year.
Chung said the bill she introduced, which is focused on homeowners insurance, is meant to start a conversation between the different interest groups and make it clear how insurance rates are supposed to be given to the Illinois Department of Insurance.
“It's sort of some of the things that industry was willing to acquiesce on. They would be willing to sort of see those things more regulated,” said Chung, adding her bill does not get rid of every regulation, but is more of a compromise to start the negotiation process.
Chung said the Illinois legislature should look at other causes that are driving up rates like the “storm chasers” scam that could affect insurance rates.
“As soon as a big storm comes in, people come [shortly thereafter], knocking on your door promising you a new roof. Those are those people that we're trying to, trying to regulate in a way, because, again, they're the ones who are driving up costs," she said.
Chung said the Illinois legislature should try to regulate other industries as well to help lower insurance rates and not just focus on insurance companies.
State Farm pushed back against the insurance proposal the governor has endorsed, but spokesperson Gina Morss-Fischer said the insurance company would not oppose Chung's proposal.
“Although State Farm does not believe additional homeowners rate regulation is needed in Illinois, State Farm would not oppose HB 5619 as it provides for reasonable rate regulation that aligns with the laws of many other states,” Morss-Fischer said in a statement.
Brooke Kelley, assistant vice president of state government relations at American Property Casualty Insurance Association [APCIA], spoke on behalf of Country Financial. She said Pritzker’s insurance bill would increase insurance rates in Illinois.
“While the industry continues to be concerned about the impact of a more aggressive regulatory system in Illinois, Rep. Chung’s proposal strikes a better balance,” Kelley said in a statement. “Rep. Chung has been a tremendous advocate for her constituents and all Illinoisans in this policy debate.”
Kelley and Morss-Fischer said they would continue to work with the Illinois government to lower insurance rates.
Chung said something is going to have to get passed this spring session, but Pritzker's bill is a “non-starter."
