SPRINGFIELD, Ill. – More than 51,000 Illinois farm mutual insurance policyholders were at risk of losing their coverage in the Land of Lincoln until a state law signed by Gov. JB Pritzker on Friday, Nov. 17 went into immediate effect. The new law, Senate Bill 765, was sponsored by State Senator Napoleon Harris, III and supported by Senate Agriculture Committee Chair Sen. Dorothy Turner (D-Springfield) and other lawmakers from both sides of the political aisle.

According to bill supporter Senator Paul Faraci (D-Champaign), the Illinois Department of Insurance had previously interpreted the Farm Mutual Insurance Company Act as requiring unlimited catastrophic aggregate reinsurance coverage. This would have led to 44 farm mutual insurance companies in Illinois being unable to offer coverage this year under the requirement, potentially leaving over 51,000 policyholders uninsured. Under the new law, companies will allow broader access to reinsurance products and risk capital, helping to avoid disruptions in the farm mutual community. Permitting farmers to purchase “adequate” rather than “unlimited” policies will allow the marketplace to correct and set appropriate pricing for policyholders while also ensuring farmers have access to coverage, according to Faraci.

“Adequate reinsurance allows insurers to offer affordable premiums for farmers, making insurance coverage more accessible,” said Faraci, in a news release. “This will help our farmers fully invest in their operations without being burdened by excessively high insurance costs.”

Turner noted that without the new law, only one insurance company in Illinois would be offering contracts that meet the DOI’s requirements. As a result, many farm mutual insurance companies would have struggled to find reinsurance coverage.

“As chair of the Senate Agriculture Committee, I’m committed to protecting all Illinois farmers,” said Turner. “Farmers are the driving force of our state, putting food on our tables and boosting the local economies. We have to ensure they have adequate coverage.”

In a separate news release, Harris said that before November 17, Illinois was one of only five states that had not updated the law. He also said the law comes with a five-year sunset provision that will allow lawmakers to assess the legislation’s effectiveness and make changes, if necessary. 

“If the state had not acted swiftly, we would have been eliminating choices for our smaller insurance companies and specifically for a large amount of farmers in our state,” said Harris, who started his legislative career as the Senate’s Agriculture Committee Chair and is now leading the Senate Insurance Committee. “We instituted this change for five years to provide small business owners with the support to provide farmers with suitable coverage. We will reevaluate in a few years to ensure we are, in fact, providing our agribusiness sector with the resources to continue to grow and be successful in Illinois.”

According to the Bloomington Pantagraph, the Illinois Farm Bureau was “neutral” on the legislation, as was the Illinois Department of Insurance. 

“We know that it will probably limit the types of policies and the amount of coverage that can be done, but it does it in a way that still allows those policies to be offered by farm mutual companies,” said Kevin Semlow, director of state legislation for the Illinois Farm Bureau.  

Semlow added that under the new law, “adequate” coverage means enough to cover damage expected from a 500-year weather event.

“We’re talking a tornado out of the normal, a large windstorm that’s supposed to only happen once every 500 years it’s so large,” he told news sources. “We have storms and thunderstorms all the time. Those aren’t 500 ones. It’s those massive ones that come in and cause huge damage.”

“Illinois relies on a stable agricultural sector for economic growth,” said Faraci. “By allowing farm mutual companies to provide ACR (adequate catastrophic reinsurance), more farmers will be able to insure their crops against potential losses, helping to prevent financial crises and agricultural disruption due to natural disasters.”

Harris was unavailable for comment on the new law during Thanksgiving week, according to a spokesperson for the state senator.