Illinois Secretary of State seeks to revamp car insurance rates by eliminating ZIP code, age and credit score factors

EAST ST. LOUIS, Ill. — Illinois drivers might soon experience a significant shift in how their car insurance rates are determined. In an effort to make insurance pricing more equitable, Illinois Secretary of State Alexi Giannoulias is advocating for the exclusion of zip codes, credit scores and age from the rate calculation process.

However, insurance industry officials are cautioning that this well-intentioned move could lead to unintended consequences.

Secretary Giannoulias, addressing a virtual town hall Wednesday, highlighted a stark statistic: between 2023 and 2024, car insurance costs surged by 18 percent.

“It’s unfair to penalize drivers based on their zip code, credit score, or age,” Giannoulias stated, pointing out that drivers in East St. Louis, Lovejoy, or Venice are paying over $200 more annually compared to those in more affluent neighboring zip codes with similar driving records.

Giannoulias added that eight out of the ten highest rates of uninsured drivers in Illinois are found in the Metro East zip codes. Many drivers shared their personal experiences during the town hall.

“I was in the 60615 zip code and I moved here to the 60653 zip code. Only five blocks away and even at that time it went up about $70,” resident Nadine Rosemon said.

The Illinois Insurance Association, however, stands by the current system. Executive Director Kevin Martin defended the use of these factors, emphasizing their long-standing role in providing accurate risk assessments for the last 20 years.

“It does nothing more than provide a more accurate assessment of risk, whether or not it’s age of a driver, whether or not it’s the use of the insurance score, but they are very valuable, actuarially justified risk factors that have been used to keep people from paying more for insurance than they need to,” Martin stated.

He cited a case in Washington where similar legislative changes didn’t bring rates down.

“It resulted in, I think, anywhere up to 40-plus percent increase on auto insurance rates within one year,” Martin said.

Advocates like the Volunteer State President of Illinois AARP Al Hollenbeck, acknowledge the need for risk-based pricing but call for a system that is both fair and transparent, particularly regarding age discrimination.

“Insurers should not cancel, fail to renew, or raise rates solely on the basis of age. And on transparency, they should clearly explain the reasons,” Hollenbeck said.

Illinois residents can voice their opinions in upcoming virtual town halls, with five more sessions scheduled or submit them in writing here.