Illinois is known for many things: its hardworking people, dynamic urban center, rich farmland, and robust manufacturing base. But quietly and powerfully, the insurance industry has emerged as one of the state’s most significant economic engines. It provides more than just peace of mind in times of uncertainty; it underwrites prosperity, security, and stability in nearly every corner of our economy and has made Illinois a national leader in protecting the financial assets and economic wealth of individuals and businesses throughout the U.S.

Yet, despite its vital role, Illinois risks losing companies and jobs, along with millions of dollars to the state at a time when federal cuts are straining the state’s budget, due to good-intentioned but overreaching regulatory and legislative initiatives that threaten the very foundation of this essential industry.

According to a 2024 report from the Katie School of Risk Management & Insurance at Illinois State University, Illinois is home to 176 domiciled property & casualty, life and health insurers. These companies collectively write almost $230 billion in premiums, more than insurers in 48 other states, second only to Connecticut. And on a per capita basis, the Gross Domestic Product contributed by Illinois insurers and related financial activities – $3,333 per person – ranks second nationwide, behind only New York.

In total, insurance carriers and affiliated services contributed nearly $42 billion to Illinois’ GDP in 2021, representing 4.5% of the state’s entire economy. That’s a larger contribution than sectors such as transportation and warehousing, construction, hospitality and food services, agriculture and even hospitals. Nationally, Illinois insurers help generate nearly 7% of the insurance-related GDP, ranking fourth in the country.

But the true value of the industry goes far beyond premium volume or GDP figures. Illinois insurers actively absorb financial risk on behalf of households, businesses, institutions and governments. In fact, they paid out nearly one-third of all P&C, life, and health losses nationwide – $162 billion – shielding stakeholders from devastating costs that would otherwise upend lives and harm economic progress.

Insurers make long-term commitments not just to policyholders but to the communities they serve. To meet those obligations, Illinois-based insurers have invested more than half a trillion dollars in bonds, including municipal and corporate bonds that help finance infrastructure, schools, hospitals and other vital public goods. Their portfolios also include strategic investments in mortgage loans and real estate projects designed to support affordable housing, farm development and commercial growth across the state.

Their contributions to the state’s fiscal health are equally notable – more than half a billion dollars in tax revenues for Illinois’ fiscal 2025 budget came directly from the insurance industry.

Yet for all this good, the industry faces growing headwinds and harsh political rhetoric.

Later this year, Health Alliance, a domestic carrier serving nearly a quarter million Illinois residents, will shut its doors, leaving individuals, families and employers scrambling for coverage, and causing the loss of almost 600 jobs in central and eastern Illinois. By 2026, Quartz and Aetna will also exit the state’s individual market, meaning that residents in almost half of Illinois’ counties will have only one insurance option in the individual health marketplace.

These exits come at a precarious time. The sunsetting of enhanced federal premium tax credits, paired with inflation and rising medical costs, is pushing health insurance premiums higher – employer plans rose by 8% in 2025, and similar increases are projected for 2026. Fewer choices and rising costs threaten affordability and coverage rates, increasing the burden on the health system and eroding the very tax base that helps fund public services.

This contraction isn’t confined to health coverage. A December 2024 report from the Illinois Commission on Government Forecasting and Accountability identified Bloomington, home to two major insurers – State Farm and Country Companies – as the worst-performing metro area for real GDP growth from 2019 to 2023 in the country. The local insurance and finance sector, a linchpin of the region’s economy, saw a sharp 31% GDP drop in 2020 and an additional 8.4% decline in 2021, with little rebound since.

Insurers exist to protect against risk and financial ruin, but when the financial and regulatory environment becomes too volatile, when losses rise and costs can’t be recovered sustainably, they might have no choice but to reduce exposure or exit markets entirely. That outcome is not just a business decision – it’s a warning sign for the state’s economy at large.

Illinois and its elected leaders and regulatory officials must recognize the insurance industry not only as a safeguard in times of crisis but as a strategic partner in economic growth, infrastructure investment, and community stability. Thoughtful regulation, strong public-private collaboration and a policy framework that respects actuarial realities are essential to maintaining a healthy, competitive insurance marketplace.

Because if insurers cannot stay, consumers lose choices, costs rise, and the state itself stands to lose much more than coverage – it risks losing one of its most reliable drivers of economic vitality.

• Laura Minzer is the president of the Illinois Life & Health Insurance Council. She lives in Springfield.