Los Angeles, CA - Today’s revelation by the California Department of Insurance(CDI) that Mercury Insurance Company has engaged in massive violations of Proposition 103 and other California consumer protection laws is deeply disturbing. But for those who have followed the sorry history of Mercury’s brazen misconduct, which dates back decades, it can come as no surprise.
To take just one example: The Market Conduct Examination and “Notice of Non-Compliance” issued today by the California Department of Insurance reveals that Mercury has continued to penalize motorists for not having prior insurance. (See pages 14 though 19 of Notice of Non-Compliance.)
Mercury is well-aware this is illegal because it has tried to change the law for two decades. A provision of Proposition 103, enacted by California voters in 1988, bars insurance companies from considering whether a motorist has been previously insured when applying for auto insurance coverage. Mercury is well aware of this law: in 2001, it was successfully sued by consumers for violating it and Insurance Commissioner John Garamendi issued a regulation confirming the law in 2002. Mercury then sponsored legislation to repeal the law in 2003, which the courts overturned as an illegal amendment to Proposition 103 in 2005.
Mercury then sponsored two ballot initiatives to repeal the “no prior insurance law” and legalize penalties for previously uninsured motorists – Proposition 17 (2010) and Proposition 33 (2012). Both were defeated by California voters.
In 2010, CDI published Market Conduct Exams that showed that Mercury had been using prior insurance, along with a litany of other discriminatory insurance practices, since at least 2001. Mercury agreed to stop the practice in 2003. You can read the documents and Consumer Watchdog’s summaries here.
The Market Conduct Examination and “Notice of Non-Compliance” issued today found the same violations.
There’s a reason why Consumer Watchdog has long stated that “You Can’t Trust Mercury Insurance.”
Today’s enforcement action by the Insurance Commissioner is the first step in finally holding this recidivist company accountable for its deliberate law-breaking. Much is at stake here, beginning with thievery of premiums and discriminatory practices that have hurt many Californians. Next is the damage done to competition in California’s insurance marketplace. Mercury’s refusal to obey the rules gives it an unfair advantage and undermines competition. Finally, Mercury’s brazen, decades-long defiance undermines the rule of law. The last time Mercury got caught, it had to pay a $27.6 million fine (after challenging it in court for a decade). And as today’s charges show, that was clearly not enough of a penalty to force the company to obey the law.
That’s why Consumer Watchdog urges Insurance Commissioner Lara to revoke Mercury’s license to do business in California. It is time to throw the book at this company and eliminate its threat to Californians and an honest insurance marketplace.
View the Notice of Noncompliance here.
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