Illinois Assigned Risk Plan Faces Significant Losses
The Illinois Commercial Auto Assigned Risk Plan is experiencing underwriting losses that approach levels commonly seen during market distress, prompting concerns regarding oversight, verification of exposure, and potential exploitation of the system by some trucking companies.
Financial Overview
Data obtained by FreightWaves indicates that from 2014 through the second quarter of 2025, the Illinois commercial assigned risk pool reported:
- $435.7 million in earned premiums
- $625.3 million in incurred losses (including IBNR)
- $67.1 million in loss adjustment expenses
- $129.6 million in other underwriting expenses
This results in a combined ratio significantly exceeding 150% over the period, with approximately 191% as of Q2 2025, implying the program disburses nearly $1.91 for every dollar earned.
Expert Insights on Fraud and Oversight
Zach Meiborg, President of Meiborg Companies, attributes these losses to fraudulent reporting by carriers and a notable lack of oversight within the state insurance pool. He explains that high-quality insurance companies are reluctant to provide coverage in Illinois due to mandatory participation in the state pool, which they believe is financially disadvantageous.
Assigned Risk Mechanism Requirements
In Illinois, insurers providing commercial auto liability must engage in an assigned risk mechanism designed to ensure coverage availability for businesses unable to procure insurance in the voluntary market. Premiums in this sector are typically much higher than standard rates due to the associated risks.
Possible Misrepresentation of Fleet Size
Meiborg suggests that some carriers may underreport their fleet sizes during the insurance application process. Certain policies are issued based on self-reported data or “fleet cards,” lacking vehicle-level verification, thus enabling operators to insure far fewer trucks than they actually operate. He argues that compliant carriers end up subsidizing these misrepresentations through higher premiums.
Industry Trends Impacting Losses
Chris Patrick, VP at Cottingham & Butler, acknowledges that while the underwriting results indicate serious issues, the causes are complex. He notes that recent tightening of rules by AIPSO, which administers assigned risk business in several states, has lowered the number of motor carriers in the program. However, he cautions that larger industry pressures, such as post-COVID freight rate declines, have exacerbated the situation.
Call for Transparency and Accountability
Both Meiborg and Patrick concede that the current financial scenario is unsustainable. Patrick emphasizes that checking for fraud and proper coverage is a significant challenge for the industry and urges a collective push for transparency to mitigate fraudulent activities that ultimately affect the insurance landscape. The Illinois Department of Insurance has yet to comment on these issues.
