SB0124
INS-MOTOR VEHICLE RATES
TL;DR
Illinois Senator Javier Cervantes introduced the Motor Vehicle Insurance Fairness Act, which would ban auto insurers from using 16 rating factors (including credit scores, ZIP codes, gender, age, occupation, and education) when setting premiums. Insurers would also have to prove their algorithms and models do not disparately impact protected groups, get prior approval for rate changes, and pay a 0.05% premium fee to fund enforcement.
How This Might Impact Your Business
Auto insurers operating in Illinois would lose the ability to use credit scores, ZIP codes, gender, marital status, age, occupation, education, homeownership, income, and prior insurance history as rating or underwriting factors.
Territorial rating survives only in limited form: geography cannot influence underwriting decisions at all, and territorial rating factors cannot swing a premium by more than 25%.
Every insurer must affirmatively demonstrate that its marketing, underwriting, rating, claims handling, fraud investigation, and any AI or algorithmic model do not produce disparate impact on protected classes (race, national origin, religion, sex, sexual orientation, disability, gender identity, gender expression).
Rate changes shift to a prior-approval regime: insurers must file complete rate applications, personal lines increases above 7% (15% commercial) trigger mandatory hearings on request, and consumer advocates can intervene with fees paid by the applicant insurer.
All rate filing data becomes public record, exposing pricing methodology and model documentation to competitors, plaintiffs, and advocacy groups.
Insurers pay a new 0.05% assessment on prior-year earned premium annually by July 1 to fund the Department of Insurance's implementation.
A rate freeze applies until the Department finalizes rules (90 days for rate rules, 180 days for algorithmic testing rules); increases during that window require a hearing showing the insurer cannot earn a reasonable return.
What Should You Do
Direct your actuarial and data science teams to inventory which of the 16 prohibited factors currently drive your Illinois auto rating and quantify the revenue and loss-ratio impact of removing them.
Commission a disparate impact audit of your underwriting, claims, fraud, and marketing algorithms now, before the Department publishes its testing methodology in roughly 180 days post-enactment.
Have legal and compliance model a prior-approval filing workflow, including how to protect proprietary model documentation that would become public under the bill's disclosure rule.
Brief your finance team on the 0.05% earned premium assessment and budget for intervenor fee awards in future rate proceedings.
Track SB0124 through Senate Insurance Committee and engage your trade association (NAMIC, APCIA) early; the bill is in introduction and industry input will shape the eventual rules.
Who It Affects
Sponsors
Status Timeline
introduced
Added as Chief Co-Sponsor Sen. Graciela Guzmán
January 17, 2025