Illinois Insurance Bill Could Raise Costs and Reduce Consumer Choice, Industry Group Warns

Senate Bill 1486 Would Limit Insurers' Ability to Price Risk

A new issues brief from the Insurance Information Institute warns that Senate Bill 1486, which is moving through the Illinois General Assembly, could make property and casualty insurance less affordable and less available for consumers.

The legislation would impose additional regulatory requirements on insurers writing auto and homeowners coverage in Illinois. While the bill is intended to protect consumers, the proposal focuses on insurance pricing rather than addressing the underlying causes of rising premiums.

"Lawmakers want to help consumers, but proposals like Senate Bill 1486 risk doing the opposite," said Sean Kevelighan, CEO of Triple-I. "Rising insurance premiums are driven by real-world costs such as severe weather, higher repair expenses and legal system abuse. When legislation focuses only on limiting pricing, it can reduce competition and leave consumers with fewer choices."

Illinois Insurance Affordability

According to the Insurance Research Council's Affordability Index, Illinois insurance remains more affordable than the national average. The index measures insurance expenditures relative to median household income, and Illinois homeowners' and personal auto insurance affordability compares favorably with the U.S. average.

The issues brief noted that limiting insurers' ability to price risk accurately can erode policyholder surplus. This is the financial cushion insurers are required to maintain to pay claims. As surplus declines, insurers are forced to raise rates further or reduce their appetite for risk, resulting in less competition and fewer coverage options for consumers.

Statewide Weather Risks

Illinois has already experienced more tornadoes than any other state this year, with nearly 100 tornadoes recorded. Illinois premiums are priced for the risk in this state rather than losses in other states, including wildfires, earthquakes, or hurricanes.

State Farm noted that home insurance claims costs in Illinois are exceeding premiums collected. Last year, total costs amounted to $1.26 for every dollar in premium collected. The year before, the ratio was $1.30. These losses are unsustainable according to State Farm.

Inflation and rising material and labor costs are affecting repair and rebuild costs, which drives home insurance rates higher. Severe weather including wind, hail, and tornadoes is increasing in Illinois. Illinois had more hail damage claims than any other state except Texas in 2024.

Industry Impact on Illinois Economy

Illinois is a major hub for the property and casualty insurance industry. The state is home to two of the five largest U.S. property and casualty insurers and two of the five largest insurance brokerage firms. The industry is a significant employer and investor in the state's economy.

Recommendations for Policymakers

The Insurance Information Institute recommended that policymakers focus on solutions that strengthen resilience, reduce fraud, and address excessive litigation. By addressing these underlying issues, the industry can protect consumers while maintaining a stable and competitive insurance market.

Other states provide examples for consideration. Florida has seen improvements in insurance affordability after enacting reforms aimed at curbing legal system abuse and fraudulent claims. California policymakers continue to grapple with the consequences of long-standing regulatory barriers to insurance availability despite having rates below the national average.

Next Steps

The Illinois House passed an amended version of Senate Bill 1486 in April 2026. The bill must still receive approval from the Senate and the Governor's signature to become law.

The current language in the bill would strengthen oversight of insurance rates, prohibit unfairly discriminatory pricing, and prevent insurers from shifting out-of-state costs onto Illinois policyholders.