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SB 2698

MS Dementia Care Program; extend period of operation of.

2025 Regular Session

Illinois imposes prior approval for homeowners/auto rate hikes (from 2028), caps annual increases at 10%, expands Dept of Insurance oversight, penalties, and consumer protections.

Approved by Governor
#appropriationsa #publichealthandhumanservices #publichealthandwelfare
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Bill Summary · SB 2698

Summary — SB 2698: “MS Dementia Care Program; extend period of operation of.”

(Note: bill text actually amends the Illinois Insurance Code by adding a new Rates article titled the Insurance Rate Fairness and Consumer Protection Law)

Status & Key Dates

  • Bill number: SB 2698
  • Sponsors: Sen. Michael E. Hastings (primary); Sen. Meg Loughran Cappel (co-sponsor)
  • Introduced: March 13, 2025 (version content shows codification actions)
  • Status: Approved by Governor
  • Effective date: January 1, 2028
  • Companion: HB 4344

Purpose / Intent

The bill creates a new Article XLVIII in the Illinois Insurance Code — the Insurance Rate Fairness and Consumer Protection Law — intended to limit unjustified increases in homeowners and automobile insurance premiums, improve transparency in insurer rate-setting, and give the Illinois Department of Insurance (the Department) enhanced oversight and enforcement powers to protect consumers.

Major Provisions

  • New statutory codification: Adds Article XLVIII (215 ILCS 5/1801 et seq.) to the Illinois Insurance Code with sections on purpose, definitions, rate approval, limits, examinations, penalties, and rulemaking.
  • Prior approval for rate changes (Sec. 1815): Starting January 1, 2028, insurers must submit proposed increases for homeowners and auto premiums to the Department for approval. The Department must review filings within 60 days; if no decision is made in 60 days the request is deemed denied until further review. No rate increase may be implemented without prior written approval.
  • Annual increase cap (Sec. 1830): Insurers may not increase premiums by more than 10% per year for any policyholder unless they demonstrate “exceptional justification” (e.g., increased claims from natural disasters, regulatory changes, or unforeseen market shifts). The Department has sole discretion to accept such justification.
  • Market conduct examinations (Sec. 1835): The Department must examine insurers at least once every 3 years to assess rate-setting fairness, transparency of filings, and adherence to approved rates; corrective actions, fines, or sanctions may follow.
  • Penalties & remedies (Sec. 1840):
    • $100,000 per offense for submitting false or misleading information in a rate request.
    • Up to $250,000 per violation for implementing unapproved increases or other noncompliance.
    • Repeated noncompliance: $1,000,000 penalty and potential suspension of the insurer’s license up to 12 months; continued violations may lead to permanent revocation.
    • Policyholders harmed by unapproved increases are entitled to reimbursement of overpaid premiums plus a 30% penalty on the overpaid amount.
  • Rulemaking (Sec. 1845): Department may adopt rules needed to implement and enforce the law.

Who is affected

  • Insurers offering homeowners and automobile insurance in Illinois (new filing, approval, and compliance requirements).
  • Illinois policyholders of homeowners and auto insurance (protections from rapid/unapproved premium increases and remedies for overpayments).
  • Illinois Department of Insurance (expanded review, examination, enforcement responsibilities).

Procedural/timeline aspects and likely effects

  • Operative date: January 1, 2028 for prior-approval and other provisions.
  • Department review timeline: 60-day decision window for rate filings; market exams at least every 3 years.
  • Potential impacts include increased regulatory oversight and filing burdens for insurers, constraints on year-to-year premium growth for consumers, stronger enforcement deterrents for noncompliance, and possible market responses (e.g., insurers seeking more detailed exceptional-justification evidence or adjusting underwriting/coverage availability).

This summary focuses on the bill’s substantive changes to insurance rate regulation and the practical consequences for insurers, policyholders, and the Department of Insurance.

Compiled from official sources — confirm details with the bill’s official record.

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