Illinois General Assembly - Full Text of SB0268

Sen. Michael E. Hastings

Filed: 3/4/2025

10400SB0268sam001 LRB104 08773 BAB 22807 a

AMENDMENT TO SENATE BILL 268

AMENDMENT NO. ______. Amend Senate Bill 268 by replacing everything after the enacting clause with the following:

"Section 1. This Act may be referred to as the Rate Accountability, Transparency, and Equity (RATE) Act.

Section 5. The Illinois Insurance Code is amended by adding Article XXVI 1/2 as follows:

(215 ILCS 5/Art. XXVI.5 heading new)

ARTICLE XXVI 1/2. RATES

(215 ILCS 5/417.01 new)

Sec. 417.01. Purpose. The purpose of this Article is to promote the public welfare by regulating insurance rates in order that they will not be excessive, inadequate, or unfairly discriminatory. Nothing in this Article is intended (1) to prohibit or discourage reasonable competition or (2) to authorize or encourage, except to the extent necessary to accomplish the purpose of this Article, uniformity in insurance rates, rating systems, rating plans, or practices. This Article shall be liberally interpreted to carry into effect the intent of this Section.

(215 ILCS 5/417.02 new)

Sec. 417.02. Applicability. This Article applies to personal property and private automobile lines of business licensed under Class 2 or 3 of Section 4 of this Code, including, but not limited to, homeowners and renters insurance.

(215 ILCS 5/417.03 new)

Sec. 417.03. Setting rates.

(a) Rates shall be made in accordance with the following provisions:

(1) Rates shall not be excessive, inadequate, or unfairly discriminatory. Unfair discrimination exists if, after allowing for practical limitations, the price differentials fail to equitably reflect the differences in expected losses and expenses. A rate is not unfairly discriminatory if different premiums result for policyholders with similar loss exposures but different expenses, or similar expenses but different loss exposures, so long as the rate reflects the differences with reasonable accuracy.

(2) No rate shall be held to be excessive unless such rate is unreasonably high for the scope of coverage provided. No rate shall be held to be inadequate unless it is unreasonably low for the scope of coverage provided and continued use of it would endanger the solvency of the company.

(3) Consideration may be given, to the extent applicable, to past and prospective loss experience within and outside this State, to a reasonable margin for underwriting profit and contingencies specific to this State, to past and prospective expenses both nationwide and those especially applicable to this State, and to all other factors, including judgment factors, deemed relevant within and outside this State.

Consideration may also be given in the making and use of rates to dividends or savings allowed or returned by companies to their policyholders, members, or subscribers.

(4) The systems of expense provisions included in the rates for use by any company or group of companies may differ from those of other companies or groups of companies to reflect the operating methods of any such company or group with respect to any kind of insurance, or with respect to any subdivision or combination thereof.

(5) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Such standards may measure any difference among risks that have a probable effect upon losses or expenses. Such classifications or modifications of classifications of risks may be established based upon size, expense, management, individual experience, location or dispersion of hazard, or any other reasonable considerations and shall apply to all risks under the same or substantially the same circumstances or conditions. The rate for an established classification should be related generally to the anticipated loss and expense factors of the class.

(215 ILCS 5/417.04 new)

Sec. 417.04. Rate filings.

(a) Each insurer under this Article shall file the following with the Department 60 days in advance of a proposed aggregate rate change of 5% or more or in advance of a new product filing: the applicable rate manual, minimum, class rate, rating schedule, loss cost adjustment, supplementary rating information, and rating plan; every rating rule; and any additional rating information as determined by the Department.

(b) A company may use a rule and rate filed under this Article on and after the date it is filed, unless the aggregate change is 5% or more in which case Section 417.05 shall apply.

(215 ILCS 5/417.05 new)

Sec. 417.05. Flex rating; prior approval.

(a) Requested rate changes that provide for an aggregate rate change of or greater than 5%, cumulatively considering all other rate changes in the preceding 12 months, shall be submitted for prior approval by the Department. All new programs shall also be subject to prior approval provisions.

(b) For all private automobile insurance policies issued, delivered, amended, or renewed with effective dates on or after January 1, 2027 with a proposed rate change of or greater than 5%, all rate information as set forth in Section 417.04 must be filed with the Department at least 60 days before the rates are intended to take effect.

(c) For all personal property policies, including homeowners' and renters' insurance issued, delivered, amended, or renewed with effective dates on or after January 1, 2026 with a proposed rate change of or greater than 5%, all rate information as set forth in Section 417.04 must be filed with the Department at least 60 days before the rates are intended to take effect.

(d) A filing shall not be effective nor used until approved by the Department. A rate filing shall be modified or disapproved if the premiums are excessive, inadequate, or unfairly discriminatory as described in Section 417.03.

(e) A filing shall be deemed approved and legally effective if the Department fails to disapprove the filing within 60 days after the filing, unless the Department issues a notice of objection to the filing in which case the filing shall not be deemed approved until the Department takes further action approving, disapproving or modifying the filing.

(f) If, within 60 days after any filing the Department, finds that the filing does not meet the requirements of this Article, the Department shall send the company notice of disapproval, specifying in what respects such filing fails to meet the requirements of this Article. Any company whose rate has been modified or disapproved by the Department may request a hearing within 10 days after the action taken. The action of the Department in disapproving or modifying the rate shall be subject to judicial review under the Administrative Review Law.".