The American Property Casualty Insurance Association (APCIA) has responded to two class action lawsuits claiming that major insurance companies in California are working together to limit homeowners insurance options. This situation has forced many consumers to turn to the California FAIR Plan, a state-backed program that offers less comprehensive coverage.
The lawsuits allege that insurers, which cover about 75% of the homeowners insurance market in California, have been canceling existing policies and denying new coverage in areas like Pacific Palisades, Malibu, and Altadena. As a result, homeowners have had to rely on the FAIR Plan, which has been criticized for providing limited coverage. The lawsuits argue that this led to significant uncovered losses during the recent Los Angeles wildfires, costing homeowners millions.
One of the lawsuits also claims that consumers ended up paying higher premiums for FAIR Plan policies, which offer less protection than what they previously had. The legal actions suggest that these issues arise from a coordinated effort by insurers to restrict access to more comprehensive policies.
In defense, APCIA’s chief legal officer, Stef Zielezienski, rejected the allegations. He stated that the organization has been raising concerns about the declining conditions in California’s property insurance market for years. He emphasized that APCIA opposes the creation and expansion of state property plans like the FAIR Plan, as insurers ultimately bear the financial risks associated with them.
Zielezienski pointed out that APCIA complies with all antitrust laws and has legal counsel monitoring its activities to ensure adherence. He described the lawsuits as illogical and without merit, insisting that the focus should be on addressing the real challenges facing the insurance market in California.
These lawsuits come at a time when the California property insurance market is experiencing instability. Many insurers have reduced their offerings or exited the market, citing factors like increased wildfire risks and rising claims costs.
In response to these ongoing issues, the California Assembly recently passed the FAIR Plan Stabilization Act. This new legislation aims to give the FAIR Plan more financial resources by allowing it to issue bonds or establish lines of credit.
As this situation unfolds, it raises important questions about the future of homeowners insurance in California and the protections available to residents in high-risk areas.