Insurance companies operating in Illinois have a transparency problem with state regulators and consumers, four top state officials alleged Wednesday.

Illinois leaders remain frustrated by State Farm’s rate hikes on Illinois homeowners and threatened more state regulation over premium increases in a letter to the editor published Wednesday in the Chicago Tribune. At the same time, Secretary of State Alexi Giannoulias launched a campaign to push lawmakers to restrict the factors that auto insurance companies can use to set premiums.

“The horrible, hard truth is that car insurance companies charge you more for auto insurance based on your credit rating, the neighborhood you live in and your age,” Giannoulias said at a news conference Wednesday on Chicago’s South Side. “And it really doesn’t matter that you’re a safe driver.”

The secretary of state said driving records should be the “primary factor” companies use to set rates, and the current system is “rigged” against drivers because it uses factors “having nothing to do with your driving record.” He said he wants lawmakers to pass legislation banning non-driving factors from being considered in a formula that sets a person’s car insurance rates.

Giannoulias cited instances where a driver with a good credit score and a conviction for driving under the influence pays less for insurance than a driver with a clean record but low credit score. He added data shows ZIP codes with a high minority population pay 10 times more than a non-minority area, while people who are 70 years old pay 12% more than 60-year-olds.

“Reforming the system will make insurance more affordable for safe drivers, otherwise the risk is that fewer Illinoisians will be able to afford car insurance, and the number of uninsured drivers will increase as fewer opt to pay additional costs,” he said. “This will make our roads less safe.”

Drivers in Illinois are required to have insurance.

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New campaign launched

Giannoulias’ office is launching a campaign that will include a website where Illinois consumers can submit stories of alleged unfair rates and discrimination by auto insurance companies. His office will also host a series of town hall meetings around the state to gather input from residents on changes they want lawmakers to make.

“Our end goal is to introduce and to pass legislation in the General Assembly that will ensure fairness and transparency in insurance ratemaking for Illinoisians,” he said.

Lawmakers have introduced legislation to ban non-driving factors from insurance equations for several years, but the bills have gotten little traction in Springfield. Rep. Rita Mayfield, D-Waukegan, a member of the House Insurance Committee, accused her fellow committee members of being “very pro-industry.”

“They are not individuals that care; they are not individuals that have that driving push for change. They like things the way they are,” she said.

However, the committee’s chair, Rep. Thaddeus Jones, D-Calumet City, has introduced the bill Giannoulias wants lawmakers to pass.

Giannoulias said an aggressive lobbying campaign by the insurance industry using “scare tactics” has caused lawmakers to avoid the issue.

In a joint statement, the Illinois Insurance Association, American Property Casualty Insurance Association and National Association of Mutual Insurance Companies said Illinois’ currently policies allow rates in the state to remain lower than in other states and insurance companies do not consider race, income, religion or ethnicity.

“Allowing insurers to continue using a wide set of objective criteria to determine risk and set rates will ensure this market can continue to flourish,” the group said. “We oppose efforts to limit the actuarial process that has driven companies out of other large states and led to increased premiums for the majority of policy holders.”

State Farm accused of hiding information

As Giannoulias called on lawmakers to put new regulations on car insurance companies, Gov. JB Pritzker, House Speaker Chris Welch, D-Hillside, and Senate President Don Harmon, D-Oak Park, published a letter in the Tribune further criticizing State Farm for increasing home insurance costs in Illinois.

The trio said the company has not been transparent with the state about the reason for the increase. The Bloomington-based company began raising premiums this month for Illinois homeowners by 27.2%, citing growing losses the company is taking from severe weather claims. But Pritzker and the General Assembly’s leaders aren’t buying it.

Read more: Pritzker seeks more regulatory authority over homeowners insurance business

“State Farm’s huge rate hike raises suspicion because it is inconsistent with what we know,” the leaders wrote. “When insurance companies suddenly want to increase customer premiums $750 and blame it on their loss ratio, we simply ask them: Prove it.”

State Farm has not done that, they wrote. They said the company has not provided the Illinois Department of Insurance with data showing losses it is suffering, and they believe the company may be using data from other states to justify the rate increases – a claim State Farm has previously denied.

State Farm is “disappointed” by the governor’s and legislative leaders’ comments and said they use “extensive data” to make decisions.

“We have been transparent in our conversations with regulators and elected officials concerning the rate filing,” the statement said. “We offered to provide any additional information related to this increase and did so upon request. State Farm has worked openly and honestly with all parties in this process and looks forward to continuing to have conversations with state leaders.”

More regulation considered

The leaders said Illinois should be like other states and lawmakers should give the department authority to review rate increases to determine whether they are fair or necessary.

“Momentum was already building for Illinois to change this policy and join the rest of the nation even before State Farm’s rate hike,” the leaders wrote. “The company’s actions now have pushed this commonsense consumer protection into the spotlight for the General Assembly’s fall session.”

The latest push for insurance regulation could make an already-packed fall session busier for lawmakers. The General Assembly reconvenes in October with major reforms and funding changes for public transportation and possible responses to federal spending changes already on the docket.

Capitol News Illinois is a nonprofit, nonpartisan news service that distributes state government coverage to hundreds of news outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.