Best Wire – Consumer Group Seeks to Ban Mercury Insurance From California

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By Timothy Darragh, BEST WIRE

A consumer group has filed a petition to intervene in a California Department of Insurance enforcement action against Mercury Insurance Group for allegedly overcharging, misleading and discriminating against homeowners and motorists.

The consumer group, Consumer Watchdog, said in a statement that repeated alleged violations of Proposition 103 should mean Mercury the state’s sixth-largest homeowners insurer and seventh-largest private passenger automobile insurer loses its license to do business in California.

“Mercury has consistently refused to obey the rules California voters put in place with Proposition 103 to stop price-gouging and practices that discriminate against those who can least afford it,” said Benjamin Powell, Consumer Watchdog staff attorney. “Previous investigations and multimillion-dollar penalties have clearly failed to deter the company from wrongdoing. Mercury, as a repeat offender, must pay a steep price or no insurer will bother to obey the law. Consumer Watchdog looks forward to working with CDI prosecutors to bring Mercury to justice which we believe means barring Mercury from doing business in the state.”

An attempt to obtain comment from Mercury was unsuccessful. Mercury denied the charges when the department first announced them in 2022 (BestWire, Aug. 2, 2022).

The Consumer Watchdog petition says the department in September, 2021 initiated a non-compliance action against Mercury, citing 29 alleged violations of state regulations.

The department alleged Mercury overcharged good drivers and other motorists, penalized motorists for not previously carrying insurance, charged unauthorized rates and charged discriminatory, it said. Specifically, the department accused Mercury of forcing consumers to meet unapproved requirements, such as interior home inspections, to get insurance; failing to give all consumers with good driving records the Prop 103-mandated 20% discount; denying drivers insurance based on their previous insurance history; and denying insurance policies for consumers who previously had their driver’s license suspended for unpaid child support, Consumer Watchdog said.

The latest complaint is at least the third time since 2004 that the department has charged Mercury with violations of Prop 103’s consumer protections and other state laws, it said.

The California Supreme Court in 2019 denied a petition by Mercury Insurance Co., letting stand a record $27.6 million fine the department of insurance levied on the company for illegally charging broker fees on its automobile policies.

The court’s denial of Mercury’s petition for review ended a 20-year-long case and upholds the largest fine the department has imposed on a property/casualty company for violations of the state’s Prop 103 (BestWire, Aug. 16, 2019).

The company also settled noncompliance charges with the department in 2015 for $1 million, records show.

An attempt to obtain comment from the department was unsuccessful.

The five largest homeowners multiperil writers in 2022, based on direct premiums written, were: State Farm Group, with a 20.58% market share; Farmers Insurance Group, 14.46%; CSAA Insurance Group, 6.66%; Liberty Mutual Insurance Cos., 6.43%; and Allstate Insurance Group, 6.36%; according to BestLink.

The top five writers of all private passenger auto insurance in California in 2022, based on direct premiums written, were: State Farm Group, with a 12.39% market share; Berkshire Hathaway Insurance Group, 11.79%; Allstate Insurance Group, 10.73%; Farmers Insurance Group, 10.22%; and Auto Club Enterprises Insurance Group, 9.27%, according to BestLink.

Underwriting entities of Mercury General Corp. have current Best’s Financial Strength Ratings of A (Excellent).

(By Timothy Darragh, senior associate editor, BestWire: [email protected])

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