California Antitrust Insurance Lawsuit | Property Insurance Coverage Law Blog

The recent filing of two sweeping antitrust lawsuits in California against a long list of most of the admitted California insurance companies has generated immediate attention within the insurance industry. ¹ The lawsuits accuse major property insurers of colluding to reduce access to affordable and comprehensive fire insurance in high-risk areas of California by collectively withdrawing from the voluntary insurance market and funneling homeowners into the California FAIR Plan. While the allegations are significant, it is important to remember that they remain allegations. As I have repeatedly reminded readers of this blog, a lawsuit is a statement of one side’s claims and legal theories, and all defendants are presumed innocent of any wrongdoing until the facts alleged in a complaint are proven in court.

The complaint was filed by two highly respected law firms. Shernoff Bidart Echeverria LLP has long been recognized as one of the premier policyholder law firms in the country, known for taking on major insurers in groundbreaking bad faith and consumer protection cases. Michael Bidart is a respected colleague and has built a career representing individuals and businesses against large insurance entities. His firm has long supported the efforts of United Policyholders.

Joining them is Larson LLP, led by former U.S. District Judge Stephen Larson. Larson LLP has a reputation for handling complex commercial litigation, regulatory disputes, and high-stakes trial work. The pairing of these two firms brings substantial legal experience and resources to what could become one of the most consequential antitrust cases in recent memory related to insurance practices. These are serious lawsuits filed by excellent attorneys and not brought for publicity.

According to the complaints, the insurers named in the case control approximately seventy-five percent of the California homeowners insurance market. The plaintiffs allege that beginning in 2023, these insurers collectively began canceling, non-renewing, and refusing to write new policies in certain fire-prone areas such as Malibu, Altadena, and the Pacific Palisades. The suits contend that this was not a series of independent business decisions but instead, a coordinated effort to withdraw from those areas and force homeowners into the state-run FAIR Plan, which offers more expensive policies with significantly less coverage.

At the heart of the complaints are the allegations that these companies engaged in a boycott. In antitrust law, a boycott refers to an agreement among competitors to refuse to deal with a specific party or market segment. Such group boycotts are considered serious violations of antitrust law because they distort market competition by excluding certain participants or limiting consumer choice.

In this case, the plaintiffs claim the boycott targeted high-risk fire zones, resulting in homeowners losing access to competitive policies and being pushed into a single, inferior insurance option. The alleged result was that homeowners were forced to pay more money for less protection while the insurers reduced their own financial exposure and continued to benefit financially through their participation in the FAIR Plan.

These lawsuits are based on California state law, specifically the Cartwright Act, which is California’s version of antitrust legislation. Unlike the federal antitrust laws, the Cartwright Act does not include the limited exemption granted under the McCarran-Ferguson Act, which provides insurers some protection from federal antitrust laws when their conduct is regulated by the state and does not involve boycott, coercion, or intimidation.

Even under federal law, the exemption does not apply to conduct involving boycotts, which are specifically carved out. In this case, the plaintiffs allege a boycott at the very center of their claims. That alone is a substantial reason why the antitrust exemption would not apply. In addition, the conduct at issue involves the collective withdrawal from markets, shifting consumers into a plan jointly controlled by the same insurers, and potential manipulation of access to products. In my view, these appear to be well outside the limited scope of any antitrust immunity.

If the case moves forward, it will proceed into discovery. This is the phase in litigation where both sides exchange documents, take depositions, and seek records and communications that may support their claims or defenses. Plaintiffs’ lawyers will likely seek internal emails, memoranda, meeting notes, and communications among insurers regarding decisions to pull back from the voluntary market. They will also seek to understand the roles various company executives played in these decisions and whether competitors were aware of, consulted with, or influenced one another.

Trade association involvement will also come under scrutiny. Many of the named insurers are members of California-based trade groups such as the Association of California Insurance Companies, the Personal Insurance Federation of California, and other industry-specific organizations. Plaintiffs will be looking for records from these associations to determine whether insurers used these forums to share strategies, align decisions, or agree on whether or not to write business in certain areas.

It is common in antitrust cases for courts and plaintiffs to look for what is known as parallel conduct, where multiple competitors behave the same way at the same time. While that alone is not enough to prove collusion, courts often look for what are called “plus factors,” such as communications between companies, membership in common associations, or evidence of motive to align conduct. The lawsuit already references statistics showing a rapid increase in FAIR Plan enrollments and market concentration, as well as allegations that the FAIR Plan’s design and governance structure allows insurers to reduce their own liability while charging higher premiums. These facts, if substantiated, could support the plaintiffs’ claims.

The insurance companies named in the lawsuit will have the opportunity to respond, present evidence, and argue that their decisions were based on legitimate business judgments, such as wildfire risk, reinsurance costs, and regulatory challenges. However, the lawsuit opens a major conversation about competition, transparency, and fairness in California’s insurance market. It raises the question of whether coordinated market exits can be considered illegal conduct when they result in reduced access and higher costs for consumers.

This case may ultimately help define the boundaries of what is lawful in an industry that is both heavily regulated and highly consolidated. Antitrust lawsuits in the insurance arena are not brought as often as they were 50 years ago. These suits should prompt serious reflection within the insurance industry about how decisions are made and how those decisions are perceived when many competitors act in the same way at the same time. Whether or not the plaintiffs prevail, the lawsuit reinforces the importance of antitrust awareness in claims handling, underwriting, and strategic decision-making at the executive level. The potential consequences of violating these laws are significant, and insurers should be taking steps now to ensure they are not exposed to similar allegations in the future.

For background, I recently wrote about the basics of antitrust laws for insurance practitioners in A Basic Understanding of Antitrust Law for Claims Adjusters.

Thought For The Day

“When everyone is thinking alike, no one is thinking.”
—Walter Lippmann

¹ Canzoneri v. State Farm Fire & Cas. Co, et al., (Cal. Super. Ct. – Los Angeles 2025); Ferrier v. State Farm Fire & Cas. Co, et al., (Cal. Super. Ct. – Los Angeles 2025).