Pandemic deals from auto insurers spark response in Springfield, with consumer-focused reforms planned


State Sen. Jacqueline Collins, D-Chicago, says she hopes reports that Illinois drivers have had to pay too high car insurance premiums during the coronavirus pandemic will help her find a support for consumer-centric insurance reforms.

Being able to see the stark numbers of pandemic surcharges could spur lawmakers — and the car owners who vote for them — to lobby and demand that state insurance regulations be rewritten to be more user-focused. consumer, as they are in most other states. , says Collins.

She says she plans to introduce legislation in the fall veto session to give the Illinois Department of Insurance more power over how much insurers can charge.

According to Collins, the idea is to give the department the power to impose refunds when premiums are too high and to prohibit the use of “discriminatory” non-driving features in pricing – an issue put highlighted by a Chicago Sun-Times investigation.

This would represent a huge change for Illinois, home to insurance giants Allstate of Northbrook and State Farm of Bloomington and historically one of the most insurance-friendly states.

Along with high inflation and today’s gas prices, state data shows Illinois customers of the four largest insurers overpaid by at least $280 million during the pandemic — that insurers could have provided larger “coronavirus relief reimbursements” and still maintained the same profits — people are fed up, Collins says.

“People are already hurting,” she says, and car insurance is not something drivers can decide to cut their budget for. “We are a state that requires consumers to purchase insurance.”

Data on the fallout from the Illinois pandemic, released online in late June, provided a rare window into how the industry is working here. State regulators had required all auto insurance companies operating in Illinois to disclose the amount of money they collected, paid out and kept for themselves during the height of the pandemic.

Insurers have done quite well, according to the figures, even after making the “pandemic relief” reimbursements they have been trumpeting.

Illinois’ four largest auto insurers — State Farm, Allstate, Progressive and Geico — collectively collected about $280 million more in premiums in 2020 than they needed to maintain profitability in 2019, even after accounted for $220 million in pandemic refunds, according to an analysis by the Consumer Federation of America and the Illinois Public Interest Research Group, two consumer advocacy nonprofits.

Collins views California insurance regulation as a model. Its insurance department must approve any proposed rate increase before it can take effect. It also obliges insurers to accept as customers any good driver who wishes to take out a policy. And it prohibits the use of credit scores to determine bonuses, among other powers.

According to the Consumer Federation of America, a dozen states require auto insurers to get pre-approval from regulators before raising rates and others require companies to disclose planned increases before implementing them.

In Illinois, auto insurers can set whatever rates they want and report them to the state after they have already started charging customers more.

A 2019 CFA study found that, over the long term, states that require pre-approval for insurance price increases were better able to slow the rate of increase.

In addition to Collins’ planned bill, Illinois State Insurance Department leaders are working on their own veto session bill “to increase transparency and accountability,” the gate said. – agency spokesperson, Caron Brookens.

The goal is to make insurance data more accessible to the public.

The insurance industry has pushed back against criticism that it should have returned more of its pandemic deals to policyholders. Industry groups say that although the roads were largely empty at the start of the pandemic, the total number of kilometers traveled has rebounded, with more people speeding and fewer seat belts.

They cite traffic crash data from the National Highway Traffic Safety Administration, which showed the first year of the pandemic was particularly deadly. Nationally, 38,824 people were killed in motor vehicle crashes in 2020, the highest number since 2007. In Illinois, 1,194 people died from crashes in 2020, up from 18.3% compared to 2019.

With inflation and supply chain issues making auto repairs more expensive, the industry says insurers should be able to charge whatever premiums the market will bear.

The Illinois Big Four are raising rates, led by Geico, with an average increase of 17% for some long-time customers starting next month.

Abe Scarr, state director of Illinois PIRG, a consumer advocacy group that supports greater oversight of auto insurance rates, said it would be a “heavyweight” for Illinois lawmakers to d endorse consumer-focused insurance reforms, but ‘the timing could be right’. .”

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