The American Property Casualty Insurance Association (APCIA) has issued a statement following the filing of two class action lawsuits alleging that major insurance carriers in California conspired to limit standard homeowners insurance offerings, resulting in a forced shift of consumers onto the state-backed California FAIR Plan.
The litigation accuses insurers that represent approximately 75% of California’s homeowners insurance market of canceling existing policies and refusing to issue new coverage in regions such as Pacific Palisades, Malibu, and Altadena.
According to the lawsuits, this led homeowners to rely on the FAIR Plan, which offers limited coverage and left many underinsured during the Los Angeles wildfires in January. One suit alleges that the reduced limits of FAIR Plan policies contributed to uncovered losses amounting to millions of dollars.
A second lawsuit alleges that consumers paid higher premiums for FAIR Plan policies while receiving diminished coverage compared to their original insurance terms. The lawsuits assert that these outcomes stem from coordinated actions among insurers to restrict access to comprehensive policies.
In response, APCIA issued a statement through chief legal officer Stef Zielezienski (pictured above right), rejecting the allegations and defending the organization's position in the California market.
“APCIA has been sounding alarm bells about the deteriorating conditions in the California property insurance market for years with government officials and in the press,” Zielezienski said.
“APCIA has, in California and throughout the states, consistently opposed the creation and expansion of state property residual plans such as the California FAIR Plan. Insurers are ultimately on the hook for the liabilities of such plans.”
Zielezienski said that the trade association's efforts to engage government bodies fall within the legal protections afforded under the Noerr-Pennington doctrine.
“APCIA fully complies with all applicable antitrust laws and has legal counsel monitoring every member call and meeting for that purpose,” he said.
“These suits defy logic, advance meritless claims, and we are going to focus on solving the challenges in the insurance market in California,” Zielezienski said.
The lawsuits come amid growing instability in the state’s property insurance market, where several insurers have scaled back offerings or exited the market altogether, citing increased wildfire risk, rising claims costs, and regulatory constraints.
That said, the state has been working to address these issues. Earlier this month, the California Assembly passed the FAIR Plan Stabilization Act, a bill which would authorize the California FAIR Plan to access additional financial capacity through the issuance of bonds or the establishment of a line of credit.
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