Gov. JB Pritzker signs bills protecting consumers from unfair home and auto insurance premiums and rate hikes

Illinois Gov. JB Pritzker signed a pair of bills Tuesday protecting consumers in the state from "excessive, inadequate, or unfairly discriminatory" insurance rate changes for homeowners and automobile policies.

"Nowadays, some businesses are finding ever more creative ways to extract money from everyday people," Pritzker said at the signing ceremony. "Companies can dress it up in financial jargon, but Illinois families are too regularly getting taken advantage of."

One of the bills signed today requires companies to give 60 days' notice before homeowners' insurance renewal premiums rise over 10%. The other focuses on car insurance rates, and allows state regulators to review, audit, and challenge what they deem excessive hikes or unfairly discriminatory practices.

This summer's storm damage has left many Illinoisans wondering how they can afford to rebuild as they balance construction and everyday costs with insurance premiums.

The new legislation is meant to address that.  It requires home and auto insurers to answer the state's questions about rate hikes and mandates refunds to consumers if they overcharge.

"If you're telling your customers that rate hikes are necessary, you should be able to prove why," Pritzker said.

The auto insurance bill was championed by Secretary of State Alexi Giannoulias, who is now running for mayor of Chicago.

"The cost of mandatory auto insurance has become absolutely unsustainable, forcing impossible choices between paying for coverage and paying for life's basic necessities," he said Tuesday morning after the bill was signed.

The Illinois Insurance Association, the American Property Casualty Insurance Association, and the National Association of Mutual Insurance Companies issued a statement after the bills were signed, warning that "Illinois residents should be prepared for the potential impact of these new laws: higher home and auto insurance costs and fewer options for coverage."

The insurance companies argue the new rules could limit competition and raise rates anyway.

"It unfortunately sets up a system that, it's just less competitive, it's less affordable, and it's less predictable," said Brian Christenberry with the National Association of Mutual Insurance Companies, which represents around 200 insurance carriers. "And if any industry needs predictability, it's the insurance industry."

The National Association of Mutual Insurance Companies opposes the laws, saying they will decrease competition in the marketplace and make it more expensive for consumers. Christenberry said insurance is based on "math, it's not based on feelings," and said he's spoken to critics who said the math doesn't add up.

Gov. Pritzker dismissed that objection.

"it's silly to suggest that this is going to raise rates across the board," Pritzker said. "What's raising rates are when insurance companies are simply putting out their bills that people can't afford, and don't have any relationship to what's actively happening in on the ground."

Even critics agree that, if there were any rate hikes associated with the changes made by the law, they would take a few years to manifest.