Hastings files legislation to combat ‘cost shifting’ practices in insurance rate setting

SPRINGFIELD - In the wake of insurance rate hikes throughout Illinois, State Senator Michael E. Hastings has filed legislation aiming to prohibit insurance companies from engaging in "cost shifting" and to strengthen protections for Illinois consumers against unfair insurance rates.

"Cost shifting is fundamentally unfair," said Hastings (D-Frankfort). "Illinois families should not be footing the bill for losses in other states. This bill makes sure premiums reflect the real risks here in Illinois, not the costs of events thousands of miles away."

Cost shifting is the practice of passing the costs of out-of-state catastrophes, such as hurricanes, wildfires or floods, onto Illinois policyholders. Hastings' measure is designed to address this practice by ensuring residents are not forced to subsidize disasters outside the state's borders.

In addition to banning cost shifting, Senate Bill 2692 would set standards to ensure rates are not excessive or unfairly discriminatory. The measure would require that rates reflect actual risk and costs for Illinois consumers. Rates are considered unfairly discriminatory when price differences between policyholders cannot be reasonably explained by differences in risk or expenses.

"This bill is about consumer fairness," said Hastings. "It puts guardrails in place so Illinoisans pay rates that are reasonable, transparent, and tied to actual risk - not inflated by hidden practices or out-of-state costs."

Hastings also filed separate legislation, Senate Bill 2691, directing the Illinois Department of Insurance to study the effect of banning non-driving factors in rate-setting, including education, credit scores and occupation. The study would determine whether eliminating these factors could reduce costs for consumers while preserving a competitive market.

Both measures highlight Hastings' efforts to eliminate unfair practices, shine a light on how rates are set and ensure insurance companies treat consumers honestly and responsibly. Read more about the bill here.