Property owners in California have filed two lawsuits accusing more than 300 insurers of conspiring to eliminate competition in the state’s insurance market, forcing homeowners to obtain fire insurance from the California Fair Access to Insurance Requirements (FAIR) Plan. The lawsuits, filed in state court, allege antitrust violations under California’s Cartwright Act and Unfair Competition Law against major insurance companies including State Farm, Travelers, Zurich, and Liberty Mutual.
The plaintiffs claim that these insurers, who previously competed for business, colluded to restrict access to coverage in key areas of Southern California. This action led homeowners to be pushed into the FAIR Plan, which is known for offering higher premiums and lower coverage compared to traditional insurance policies.
The FAIR Plan, which is managed collectively by all admitted carriers in the state, sets maximum coverage at $3 million while premiums are often more than double the cost of standard home insurance policies in California. The lawsuits argue that the insurers’ actions created a monopoly, forcing homeowners to accept fixed, non-negotiable terms with limited choices.
Anthony Canzoneri, a Malibu property owner and class action plaintiff, claims that the insurers’ actions were driven by the dual goals of raising insurance costs for homeowners while simultaneously reducing their risk exposure. “The defendants not only diffused the risk of losses through their shared control of the FAIR Plan, but they also passed 50% of those losses onto consumers,” Canzoneri stated.
The lawsuits assert that the insurers’ conspiracy resulted in hundreds of millions of dollars in profits at the expense of homeowners, with devastating consequences for those affected by recent wildfires in Southern California.
Both complaints seek compensatory and treble damages, as well as an injunction to prevent further anticompetitive behavior by the insurers. “California’s antitrust and unfair competition laws exist to address the very kind of conspiracy that the complaints allege, depriving homeowners of the competitive insurance products necessary to fully protect them from losses,” said Stephen G. Larson, counsel for the plaintiffs.
“We are committed to ensuring that homeowners are fairly compensated and that the market for insurance in Los Angeles County is restored to fair competition,” Larson added.
Representatives from the accused insurers have not yet responded to requests for comment. The plaintiffs are represented by Michael J. Bidart, Ricardo Echeverria, and Danica L. Crittenden of Shernoff Bidart Echeverria LLP, alongside Stephen G. Larson, Robert F. Ruyak, Paul A. Rigali, and John S. Lee of Larson LLP.
The cases, Canzoneri v. State Farm Fire and Casualty Co. and Ferrier et al. v. State Farm Fire and Casualty Co., are being heard in the Superior Court of the State of California, County of Los Angeles.
