There’s an industry in Illinois that employs 160,000 people and contributes nearly 5 percent to the state’s GDP. It might not be as exciting as the tech sector, recognizable as agriculture, or prominent as financial services — but it’s a bedrock of the Illinois economy. It’s the property casualty insurance industry.
From mom-and-pop brokerage shops in communities across the state to major national companies, Illinois is home to a thriving insurance ecosystem. This is good for the state, with Illinois collecting more than $600 million in revenue from the industry annually. This is good for the economy, with thousands of working families benefiting from stable jobs and strong wages. And most importantly — this is good for consumers.
Here in Illinois, consumers benefit from one of the most competitive insurance marketplaces in the nation. More than 200 companies offer coverage in the state, which means this is a highly competitive marketplace. Insurers compete to gain consumers’ business and are incentivized to keep costs low. That’s why Illinois auto insurance premiums are 18 percent below the national average and the 19th lowest in the country.
While that outlook is positive, the insurance industry exists because bad things can happen — from extreme weather and burst pipes to car accidents and workplace injuries — and insurers are there to provide peace of mind and protection for the unexpected.
With the overall increase in more severe natural disasters, that protection is more critical than ever before. Illinois is not immune to these trends. In fact, Illinois experienced 120 reported tornadoes in 2023, the most of any state in the nation. Homeowners insurers in Illinois averaged a 6.2 percent underwriting loss over the past decade with a whopping 27.6 percent underwriting loss in 2023.
And yet, rather than focusing on ways to reduce losses, strengthen homes and communities from damaging weather events, and help lower insurance costs, the legislature is considering bringing California-style overregulation to the Illinois insurance industry. We’ve seen this play out in other states on the West Coast and we know how it ends. Without the ability to set rates that appropriately account for risk, many insurers in California left the marketplace, leaving consumers with fewer options for insurance. Illinois’s competitive marketplace would suffer tremendously if similar policies were implemented in our state.
As lawmakers consider this proposal, I caution against taking any action that could potentially raise costs for consumers and damage Illinois’ healthy insurance marketplace. We have a competitive insurance market with many companies vying for consumers’ business, which helps drive down costs, and we have an insurance ecosystem that, while facing its fair share of challenges such as increasing severe weather, is fulfilling its commitment to policyholders. The industry is ready and willing to work with legislators on commonsense reform, but we are committed to protecting consumers from higher costs and preserving the state’s healthy and competitive insurance marketplace.
Kevin Martin is the Executive Director of the Illinois Insurance Association, the insurance industry’s leader in advocating public policy positions before legislators, policymakers, and interest groups. Kevin lives in Springfield.
