A proposed study in Illinois could affect how insurance premiums are set for millions of residents, as lawmakers question whether current pricing practices lead to inequitable costs for certain groups.
House Bill 1234, which passed the Illinois House of Representatives on April 8, directs the secretary of state to investigate how factors such as ZIP codes, credit scores, and age are used by insurers and whether these criteria result in higher rates for specific demographic populations.
The study, due by Jan. 1, 2026, will also look into the availability and affordability of insurance products in the state.
Supporters of the measure say it responds to long-standing complaints from consumers who believe non-driving-related variables unfairly increase their premiums.
According to Wandreeka McBride, chief of staff to Rep. Rita Mayfield, the bill reflects concerns raised by residents who feel burdened by pricing tied to financial or demographic data.
“These practices can disproportionately impact low-income communities and communities of color, leading to higher premiums for individuals who may already face economic challenges. Further regulation may be necessary to ensure that underwriting practices are both fair and transparent,” McBride told AM Best.
While the insurance industry has not opposed the study itself, it has raised concerns about the secretary of state leading the review.
Kevin Martin, executive director of the Illinois Insurance Association (IIA), said the office has previously introduced legislation aimed at banning the use of underwriting factors like credit scores and age, calling into question the agency’s objectivity. “Putting the wolf in charge of the hen house,” Martin said, referencing the potential conflict of interest.
Martin recommended that the research be conducted by academic institutions with insurance expertise, such as the University of Illinois or Illinois State University. He also urged the involvement of the Illinois Department of Insurance, which has regulatory authority over the industry but has stated it lacks the staffing to lead the study independently.
The IIA cited a previous case in Washington state, where a temporary ban on the use of credit scores led to premium increases for more than 60% of drivers, according to an AM Best report. The ban was later struck down by courts, but the IIA argues similar action in Illinois could result in comparable outcomes.
Should Illinois reexamine its underwriting practices, or would such changes drive up consumer costs? Join the conversation in the comments.
