Illinois passed Senate Bill 714 as part of a statewide initiative to address rising automobile insurance costs and concerns about unfair and discriminatory ratemaking practices affecting drivers. Illinois had been one of only two states without a formal process for reviewing or challenging insurance rate increases. The legislation expands the State’s authority to challenge automobile insurance premium increases. Governor J.B. Pritzker signed the bill into law on August 4, 2026, and the law will take effect on July 1, 2027.
The law imposes several new consumer protections on automobile insurance carriers, including:
- requiring insurers to provide 30 days’ notice before increasing renewal premiums by more than 10 percent
- prohibiting automobile insurance rates that are excessive, inadequate, or unfairly discriminatory, with the bill defining such rates as those that don’t reflect actual differences in expected losses and expenses
- granting the Illinois Department of Insurance greater authority to review rate filings and challenge rates it deems unfair
- preventing insurers from shifting costs associated with out-of-state risks (such as natural disasters) onto Illinois policyholders
Illinois also extended similar regulatory requirements to homeowners insurance through House Bill 4273, which operates in a manner similar to Senate Bill 714. Specifically, House Bill 4273 requires insurance carriers to provide policyholders with 60 days’ notice before increasing renewal premiums by 10 percent or more. The bill also requires insurance carriers to use credible, state-specific claims data (when available) in developing rates. Insurers may supplement state-specific data with national, regional, or out-of-state data when necessary to satisfy actuarial standards of credibility.
Insurance carriers may continue to implement new rates once those rates are filed with the Illinois Department of Insurance. However, the new law grants the Department authority to review those rates and order rebates of excess premiums collected if the rates are determined to be excessive or unfairly discriminatory.
Opponents of these laws argue that they represent a fundamental shift in Illinois’ regulatory framework that could result in a destabilized insurance market similar to the rigid rate-approval system used in California. Supporters, by contrast, maintain that the new regulations will provide greater protection for consumers against rising insurance premiums. The immediate impact of the two laws remains unclear, and the full effects of the new framework may not become apparent until the laws take effect in July 2027 and insurers begin implementing the new regulations. What is clear, however, is that insurance carriers seeking premium increases exceeding 10 percent should anticipate heightened review by the Illinois Department of Insurance. Such proposed increases will also need to be supported by localized, specific, and empirically grounded data.