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$15 Million Settlement in Insurance Price Optimization Class Action

Outcome: $15 Million Settlement

Harris, et al. v. Farmers Insurance Exchange and Mid Century Insurance Company, Case No.: BC579498 in the Superior Court of California, County of Los Angeles

TZ successfully represented plaintiffs in this class action lawsuit against Farmers Insurance Exchange and Mid Century Insurance Company.

Plaintiffs initiated a class action lawsuit in the Superior Court of California against Farmers Insurance, alleging violations rooted in the use of price optimization and elasticity of demand methodologies. These practices involve adjusting premiums based on an individual’s or group’s likelihood to accept higher rates, which plaintiffs argued contravened the standards set by California’s Unfair Competition Law and the California Insurance Code. Additionally, the action claimed this constituted unjust enrichment on the part of Farmers Insurance, essentially arguing that these pricing strategies unfairly capitalized on customer loyalty and willingness to pay more, to the insurer’s undue benefit.

The settlement aims to compensate policyholders who have demonstrated loyalty with nine or more years of tenure as of August 18, 2015, or those who achieved this tenure by March 31, 2017. This includes policyholders active between August 18, 2015, and March 31, 2017.

Settlement Details

  • Settlement Class: Mid Century and Farmers policyholders with 9+ years of tenure
  • Class Period: August 18, 2015 – March 31, 2017.
  • Settlement Amount: $15,000,000 (non-reversionary)

Impact on Plaintiffs and Affected Parties

Thanks to the diligent efforts of Tycko & Zavareei LLP, the settlement not only ensures monetary compensation but also brings about crucial contractual changes to promote fair insurance practices. The key impacts include:

  • Prohibition of Price Optimization Software Usage: Farmers has agreed to cease the use of any price optimization software or consideration of price elasticity in developing California auto rates or class plans, pending regulatory changes.
  • Non-Initiation Clause: Farmers committed not to contest the California Commissioner’s Notice on the regulation of price optimization software or the consideration of price elasticity.


This class action lawsuit, championed by Tycko & Zavareei LLP, marks a pivotal moment for Farmers Insurance Exchange and Mid Century Insurance Company, compelling them to commit to principled rate-setting practices. This settlement not only provides monetary relief and assurance to policyholders but also sends a message within the insurance industry concerning the ethical use of pricing optimization techniques.

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