Insurance Law, Pages 161–167

Hartford Fire Insurance Company v. California

Supreme Court of the United States, 1993


Defendants conspired to get commercial general liability (CGL) insurance providers to change their terms in four ways:

  1. Sell "claims-made" insurance instead of "occurrence" insurance.
  2. Have the "claims-made" policy have a "retroactive date" provision, which would restrict coverage to only claims which arose after a certain date.
  3. No longer cover "sudden and accidental" pollution.
  4. Count legal defense of claims against the stated limits of coverage.

They did this by convincing the RAA, a reinsurance trade association, to boycott reinsuring policies without such changes. They also convinced many London-based underwriters and reinsurance companies to withhold reinsurance until such changes were made.

ISO, an insurance association which writes virtually all CGL forms, finally agreed to changes 2 and 3 to appease the reinsurers and discontinued forms without them.

Nineteen States and various private plaintiffs then sued with many complaints alleging violations of the Sherman Act.

Procedural History:

  • District court granted motions to dismiss for failure to state a cause of action and for summary judgment.

  • Court of appeals reversed, partially on the grounds that none of the conduct amounted to a "boycott".

Plaintiff's Argument:

The defendants' conduct violated the Sherman Act by engaging in various conspiracies to affect the insurance industry.

Defendant's Argument:

The McCarran-Ferguson Act precludes applying the Sherman Act, as it is preempted by state law and this does not amount to a "boycott".


Does the defendants conduct comprise a boycott within the meaning of the McCarran-Ferguson Act?


A boycott does not have to be a complete refusal to do business. It can just be conditional on the target changing his ways. Just refusing to agree to one deal until the terms of that deal are satisfactory is not a boycott however. It must include refusing to do business on other matters that do have otherwise acceptable terms as well. Such concerted agreements are also outlawed by the Sherman Act, but they are not prohibited by the McCarran-Ferguson Act.


A boycott must involve refusing to do business in contracts without a natural relationship to the reasons for the boycott.


Defendants' alleged conduct involved a boycott when they refused to reinsure any forms, but not when they only refused to reinsure the CGL forms. Affirmed in part, reversed in part, and remanded.