HB1252, titled the Motor Vehicle Insurance Fairness Act, would add a new section to the Illinois Insurance Code governing automobile insurance underwriting and rate-setting. The bill prohibits insurers from refusing to issue or renew auto policies, or from setting policy terms, based on a list of specified factors including sex or gender, marital status, race, creed, national origin, religion, age, employment, education, home ownership, credit information, prior insurance history, price elasticity, ZIP code or smaller territorial designations, and income or wealth. It also allows consideration of years of driving experience, and permits limited use of territorial factors only if they do not affect premium by more than 25%.
The bill would require insurers selling auto insurance in Illinois to show that their marketing, underwriting, rating, claims handling, fraud investigations, and any algorithms or models used in those practices do not have a disparate impact on protected groups based on race, color, national or ethnic origin, religion, sex, sexual orientation, disability, gender identity, or gender expression. It further establishes a prior-approval system for rate changes, requires complete rate filings with the Director of Insurance, makes filing information publicly available, and allows any person to participate in or challenge proceedings under the section. The Department of Insurance would also have to adopt implementing rules and would be funded by a 0.05% assessment on insurers' prior-year earned premium.
In practical terms, the bill would significantly expand state regulation of auto insurance pricing and underwriting, limiting the use of many common rating factors and increasing public oversight of insurer filings and business practices. It would also create new compliance obligations for insurers, including testing for disparate impact and submitting rate applications for approval before changes take effect. The bill would affect both personal and commercial auto insurance markets, as well as the Department of Insurance's rulemaking and enforcement responsibilities.
Because there are no committee transcripts or recorded votes provided, the overall sentiment cannot be measured from legislative debate or roll calls. Based on the bill text alone, the measure appears strongly consumer-protective and aimed at reducing discrimination in auto insurance pricing, but it also imposes substantial new restrictions and administrative burdens on insurers. Likely points of contention include the ban on credit, ZIP code, age, and income-based rating factors; the disparate-impact testing requirement; the public disclosure of rate filings; and the prior-approval process for rate changes.
HB1252 would amend the Illinois Insurance Code by creating a new Section 143.19.4 regulating automobile insurance underwriting, rating, and rate approval. It would bar insurers from using numerous factors in underwriting and pricing, limit territorial rating, require public rate filings and hearings, authorize public participation in rate proceedings, and impose a premium-based assessment to fund Department of Insurance implementation. The bill would also require the Department to adopt rules for rate review and compliance testing, thereby expanding state oversight of auto insurance practices and constraining insurer discretion in setting premiums and coverage terms.
No committee discussion or voting history was provided, so there is no recorded legislative sentiment to summarize from debate or roll calls. The bill’s text suggests a consumer-protection and anti-discrimination purpose, likely appealing to advocates concerned about fairness in auto insurance pricing, while insurers would likely view it as a significant regulatory expansion. On balance, the measure is framed as a fairness and transparency reform, but it would likely draw mixed reactions because of its broad restrictions on underwriting factors and its prior-approval regime.
The main points of contention are likely to be the prohibition on using factors such as credit history, age, ZIP code, income, education, employment, and prior insurance in auto insurance pricing; the requirement that insurers prove their practices do not create disparate impacts on protected groups; and the public disclosure of rate application materials. Insurers may also object to the prior-approval process, the burden of proof placed on applicants, the limits on territorial factors, and the new assessment used to fund implementation. Consumer advocates, by contrast, would likely support these provisions as necessary to curb discriminatory or opaque pricing practices.