The Illinois Senate is reviewing House Bill 1234, which mandates a study into whether insurers’ use of ZIP codes, credit scores, age, and other underwriting criteria results in unfair pricing for specific demographic groups.
The bill passed the state House on April 8 and requires the Illinois secretary of state to complete the study by January 1, 2026. It will also address issues related to insurance affordability and availability.
Rep. Rita Mayfield, a Democrat, has received complaints from constituents about the use of non-driving factors such as age and credit scores in premium calculations.
According to her legislative chief of staff, Wandreeka McBride, these practices may increase costs for individuals in low-income areas and communities of color.
McBride stated that additional regulation might be required to ensure that underwriting methods remain fair and clear.
Kevin Martin, executive director of the Illinois Insurance Association (IIA), said the insurance industry supports the study, noting that Illinois has not conducted a similar review before.
However, Martin expressed concern about assigning the project to the secretary of state’s office. He pointed out that the office had previously introduced proposals to eliminate the use of factors such as credit scores and age in underwriting, raising concerns about impartiality.
He referred to the assignment as comparable to “putting the wolf in charge of the hen house.”
Martin also questioned the office’s qualifications to manage such a project, given that its responsibilities typically involve vehicle registration, driver licensing, corporate filings, and securities oversight.
He suggested the study would be more appropriate for academic institutions like the University of Illinois or Illinois State University, both of which have programs focused on insurance and risk management.
These universities could present the data objectively and offer a platform for insurers to explain the purpose and impact of these rating factors.
While the bill was under review in the House Insurance Committee, there was discussion about assigning the study to the Illinois Department of Insurance (IDOI).
However, Martin stated that the department indicated it lacked the staff required to complete the analysis. He added that the IDOI should still participate in the process, given its role in monitoring how industry practices affect policyholders.
Martin said the department should be involved in any evaluation of industry practices to ensure accountability and transparency.
The IIA referenced an example from Washington state, where in 2021, Insurance Commissioner Mike Kreidler enacted a temporary three-year ban on the use of credit scores.
That order was later overturned by the courts, but during its enforcement, over 60% of drivers experienced premium increases, according to the IIA.
