A new study has found that auto insurance premiums are influenced not only by driving behavior but also by factors such as credit scores, age, and geographic location—prompting renewed debate over fairness and affordability in Illinois.
The report, commissioned by Illinois Secretary of State Alexi Giannoulias, reveals that non-driving-related variables play a significant role in determining insurance costs. According to the findings, motorists with poor credit can pay more than 2.7 times the premiums charged to those with excellent credit. Age is another key factor, with drivers aged 80 to 84 paying up to 72% more for bodily injury coverage than individuals in their mid-50s, even when maintaining clean driving records.
Location-based pricing disparities were also highlighted. The study found that drivers in certain ZIP codes may face premiums more than two-and-a-half times higher than those in other areas, even when all other variables are equal. Researchers say these differences disproportionately impact low-income households, working families, and older residents, raising concerns about equity in insurance pricing.
Conducted by O’Neil Risk Consulting & Algorithmic Auditing, the study supports a legislative effort led by Giannoulias to strengthen oversight of insurance rate increases. A proposed bill—already passed by the Illinois House of Representatives—would require the Illinois Department of Insurance to review any auto or home insurance premium hikes exceeding 10%. The measure would also authorize regulators to issue refunds if policyholders are found to have been overcharged.
If enacted, the legislation would allow the state to challenge rate increases deemed “excessive, inadequate, or unfairly discriminatory.” Giannoulias has argued that the proposal would align Illinois with most other states, noting that Wyoming is currently the only state without similar regulatory authority. He said the study reinforces longstanding concerns that consumers may be penalized for factors beyond their control.
The push for reform comes amid rising insurance costs across Illinois. Auto insurance premiums rose by 18%, while homeowners’ insurance rates have also seen sharp increases in recent months. Governor JB Pritzker has publicly called for tighter oversight following significant rate hikes.
Insurance companies have opposed the proposed changes, warning that increased regulation could disrupt the market and ultimately drive premiums higher. Industry groups have described the bill as one of the most sweeping regulatory proposals in the state’s history.
Insurers also note that, despite recent increases, Illinois auto insurance rates remain below the national average and have begun to ease as accident frequency and claims decline. They argue that these broader trends are not fully reflected in the proposed reforms.
Consumer advocates, however, have rejected those claims. Abe Scarr, director of Illinois PIRG, described industry concerns as overstated and called for stricter limits on how insurers determine pricing. His organization supports eliminating the use of credit scores and certain demographic factors, arguing they contribute to systemic inequities.
While the current bill does not ban such factors outright, it would give regulators the authority to challenge rate increases that rely on them under an “unfairly discriminatory” standard. However, questions remain about how rigorously these provisions would be enforced if the measure becomes law.
The study also found that multiple pricing factors can compound disparities. In some cases, drivers with identical records and profiles face sharply different premiums based solely on their location. One example cited showed a suburban driver paying more than double the premium of a rural counterpart.
Public feedback collected through the secretary of state’s “Driving Change” campaign further underscores the issue. Nearly 2,000 residents reported rising premiums despite having no accidents or violations. Some respondents, including those approaching retirement, expressed concern that increasing costs could make coverage unaffordable on fixed incomes.
The findings echo earlier investigations into insurance practices, which have shown that variables such as occupation, homeownership status, and gender can also influence premium quotes. As lawmakers consider the proposed legislation, the report is expected to intensify calls for greater transparency and fairness in how insurance rates are set.
