Insurance Trade Body Defends Members Against Collusion Allegations
The American Property Casualty Insurance Association (APCIA) has strongly rejected allegations made in two class action lawsuits claiming that major insurance carriers in California conspired to limit standard homeowners insurance offerings. The lawsuits, filed on behalf of affected homeowners, assert that insurers representing about 75% of California’s homeowners insurance market deliberately reduced coverage options in high-risk wildfire areas such as Pacific Palisades, Malibu, and Altadena.
The legal actions allege that this alleged coordinated action forced homeowners onto the state-backed California FAIR Plan, which provides limited coverage. According to the lawsuits, this shift resulted in significant financial losses for homeowners during the January Los Angeles wildfires, as FAIR Plan policies offered inadequate coverage. One lawsuit claims that the reduced limits of FAIR Plan policies led to uncovered losses amounting to millions of dollars, while another alleges that consumers paid higher premiums for diminished coverage compared to their original insurance terms.
In response to these allegations, APCIA’s chief legal officer, Stef Zielezienski, issued a statement defending the organization’s member insurers. Zielezienski emphasized that APCIA has long been vocal about the deteriorating conditions in California’s property insurance market, working closely with government officials and through media channels to address these issues. The trade association maintains that it has consistently opposed the expansion of state property residual plans like the California FAIR Plan, as insurers ultimately bear the liabilities associated with such plans.
Zielezienski cited the legal protections afforded under the Noerr-Pennington doctrine, which safeguards industry efforts to engage with government bodies. “APCIA fully complies with all applicable antitrust laws and has legal counsel monitoring every member call and meeting for that purpose,” he stated. The trade body remains focused on addressing the challenges within California’s insurance market, rather than engaging with what they describe as meritless legal claims.
The lawsuits come amid growing instability in California’s property insurance market. Several insurers have scaled back their offerings or exited the market entirely, citing increased wildfire risks, rising claims costs, and regulatory constraints. In response to these challenges, the California Assembly recently passed the FAIR Plan Stabilization Act, a bill aimed at enhancing the financial capacity of the California FAIR Plan through bond issuances or the establishment of a line of credit.
As the situation continues to unfold, industry stakeholders and policymakers are closely monitoring developments in both the legal arena and the legislative efforts to stabilize California’s property insurance market.
