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Trends and Insights: Illinois

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Increased legislative involvement in regulating homeowners’ insurance pricing and rates – as recently called for by some officials in Illinois – would hurt insurance affordability in the state, rather than helping consumers as intended. Such proposals, while perhaps politically popular, create marketplace challenges by confusing one symptom (higher premiums) with the disease’s underlying cause (increasing losses and rising costs to repair and replace damaged property).

Rising premiums are a national issue. They reflect a combination of costly climate-related weather events, demographic trends, and rising material and labor costs for repairing and replacing damaged or destroyed property. More recently, these and other losses to which the property/casualty insurance industry is vulnerable were exacerbated by inflation related to the pandemic and Russia’s invasion of Ukraine. Tariffs and other changes in U.S. economic policy have since put further upward pressure on costs.

Like any business, insurers must generate a reasonable profit to remain solvent. No insurer makes money by turning down business. In a competitive market, excessive rates cause consumers to shop around for better prices. If rates are too low, claims eventually will reduce the amount of “policy holder surplus” available to pay future claims.

Rather than target insurers with misguided legislation, states like Illinois would be wiser to work with the industry to focus on improving property owners’ risk profiles by investing in mitigation and resilience. Triple-I welcomes opportunities to collaborate with state policymakers to develop constructive approaches to risk mitigation and resilience that will benefit communities and consumers.

(As of September 10, 2025)