Insurance Information Institute warns Illinois legislation could affect insurance affordability, access

The Insurance Information Institute has announced that proposed legislative action on homeowners' insurance in Illinois could reduce both the affordability and availability of coverage. The organization is urging alternatives such as mitigation efforts, resilience strategies, and collaboration between the industry and policymakers.

Illinois homeowners currently pay less for insurance than the national average, making the market relatively affordable. According to the Insurance Information Institute’s September 2024 Issues Brief, Illinois is among the most competitive states, with affordability nearly on par with Utah, the least expensive state for homeowners’ insurance. The Institute stressed that legislative rate caps could distort this competitive balance and make coverage more scarce over time.

Rising homeowners’ insurance premiums reflect structural cost pressures rather than arbitrary rate hikes. The Issues Brief explains that climate-related disasters, global inflation, rising labor costs, and higher material prices are all contributing to more expensive claim settlements. The Institute emphasized that rates mirror these escalating risks, and artificial controls would not reduce the underlying costs but could destabilize the insurance market.

According to The Wall Street Journal, other states provide a warning of how legislative interventions can shrink insurer participation and reduce consumer choice. California has seen multiple national insurers scale back or exit after restrictions on actuarially sound pricing, while Florida continues to rely heavily on its state-backed Citizens Property Insurance Corporation due to similar regulatory pressures. The Institute cited these examples as cautionary tales for Illinois policymakers weighing intervention.

The Insurance Information Institute, widely known as Triple-I, is a nonprofit association dedicated to improving public understanding of insurance. According to its official mission statement, the organization provides data-driven insights, publishes research, and educates policymakers, consumers, and media on insurance and risk management issues. It partners with industry stakeholders to promote resilience, reduce lawsuit abuse, and support policies that strengthen the stability of insurance markets.