SF Chronicle: Lawsuit: California home insurers colluded to create an insurance crisis
FOR IMMEDIATE RELEASE
April 21, 2025
Contact: contact@insurancefairnessproject.com
SF Chronicle: Lawsuit: California home insurers colluded to create an insurance crisis
This weekend, the San Francisco Chronicle reported on two related lawsuits alleging that over two dozen insurance companies illegally colluded to drop California policyholders, sending hundreds of thousands of Californians to the FAIR Plan.
Excerpts:
The suits allege that by pushing homeowners to the FAIR Plan, private insurance companies reduced their exposure to wildfire risk while preserving their ability to profit, as FAIR Plan policies often cost much more than those from traditional insurers. [...]
Under an agreement announced last summer, insurers who are asked to pay for the FAIR Plan’s losses can pass a portion of those costs on to consumers. Last week, advocacy group Consumer Watchdog sued the California Department of Insurance and Insurance Commissioner Ricardo Lara in a bid to stop insurers from charging policyholders for the FAIR Plan’s losses from the Los Angeles wildfires. [...]
Both complaints allege that the Pacific Palisades neighborhood of Los Angeles, Malibu and Altadena (Los Angeles County) were among the areas where insurers “overtly or tacitly” agreed not to sell insurance policies, leaving most consumers to turn to the FAIR Plan. [...]
From 2018 to 2023, insurance companies dropped at least 354,000 California homeowners, according to a dataset released by the U.S. Senate Budget Committee last year. A Chronicle analysis found that the 10 largest home insurers in the state have dropped more than 100,000 Californians since 2019, while concentrating these moves in areas of high wildfire risk such as Los Angeles County.
Read the full story here.
“If true, these allegations are just the latest example of insurance companies skirting their responsibilities to homeowners,” said Sophia Wilson, spokesperson for the Insurance Fairness Project. “While California remains an epicenter, this is a national crisis. People deserve peace of mind that the insurance they’ve paid for will be there when they need it most, and it’s up to lawmakers and regulators to ensure that the costs of climate-fueled disasters aren’t borne on the backs of homeowners and renters alone.”
An investigation last year by the U.S. Senate Budget Committee showed that the insurance crisis goes far beyond California. Since 2018, more than 1.9 million home insurance policies have been dropped nationwide, with every region in the United States impacted. The Senate report also stated that “the data confirm it is climate change that is driving increasing non-renewal rates, as the counties that are most exposed to climate-related risks such as wildfires or hurricanes are the counties seeing the highest non-renewal rates.”
National Polling
The Insurance Fairness Project’s recent poll found that insurance is top of mind for American voters keenly aware of their vulnerability:
78% of voters are at least somewhat concerned about rising property insurance prices, with 40% saying they are “very concerned”;
66% are concerned about increasing extreme weather events;
74% have either been personally impacted by extreme weather or know someone else who has;
A majority of voters think the federal government and state governments are doing too little to protect consumers and hold insurance companies accountable.
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The Insurance Fairness Project is an information hub dedicated to offering insights into the home insurance crisis, exploring its drivers and highlighting solutions alongside issue experts and community advocates.
