Mercury Asking Dep’t of
Insurance for $32 Million Rate Hike On Its Car Insurance Policyholders;
Company Would Recoup All Its Money From $10 Million Prop 17 Campaign If
Rate Hike is Approved

Santa Monica, CA — Mercury Insurance, the sponsor of Prop 17, is
pushing regulators to allow a $32 million rate increase for California
drivers insured by the company and its affiliates. The company is
quietly seeking the rate hike even as it is spending $10 million on a
deceptive ad campaign trying to fool voters into believing that Prop 17
would lower car insurance costs.  The non-profit organization Consumer
Watchdog has challenged the proposed rate hike, saying the company has
played fast and loose with data in an attempt to improperly raise rates
and should actually be lowering prices by 11% for policyholders.

“Mercury Insurance is spending millions to try and convince voters
that Prop 17 would lower premiums, while it’s working behind the scenes
to jack up car insurance rates before the election,” said Doug Heller
with Stop Prop 17.  ”If Mercury raises rates by $32 million, it would
recoup every dime spent on its deceptive campaign for Prop 17, with
policyholders picking up the tab.”

Consumer advocates have slammed Mercury’s rate hike proposal as
excessive and improper.  Among other problems with the company’s plan,
Mercury has changed the actuarial formula it selected to use when it
became apparent the originally selected formula would result in lower
rates.  The company originally argued, in 2008, that it should look back
at two years worth of data to determine future trends and claimed it
was due a rate increase as a result.  But when, in late 2009, the data
indicated that the two-year trends would lead to a rate decrease, the
company suddenly changed its position and argued for the right to use
five years of data to determine its future trends.

“As with Prop 17, Mercury doesn’t care about the facts, it just looks
for any angle to squeeze more money out of drivers,” said Heller.

If approved as Mercury has proposed, the rate hike would force its
insured drivers to pay an average of about $145 more than they should,
based on Consumer Watchdog’s calculations.  The Department of Insurance
has not made a decision on the proposal.

S&P Downgrades Mercury’s Ratings

The ratings agency Standard & Poor’s has downgraded Mercury’s
financial strength rating of the company.  Among other reasons, S&P
cited “its business concentration in California” and the fact that “in
its home state of California, Mercury faces keen competition.”
 Mercury’s Prop 17 gambit is an effort to improve its bottom line in
California, on which so much of the company’s profits rely.  Mercury
claims that Prop 17 is needed to make California a competitive market,
but consumer groups opposed to Prop 17 point out that Prop 17 would
actually limit availability of auto insurance for millions of drivers
and that California, as reinforced by this S&P analysis, is
currently one of the most competitive car insurance markets in the
country.

The Stop Prop 17 campaign noted that not only is Mercury wrong in
claiming California is not a competitive insurance market, the proposed
rate hike shows that Mercury plans on using Prop 17 to bolster its
bottom line not create savings for drivers.

The Department of Insurance analysis of Prop 17 makes it clear that
if insurance companies were to provide even minimal discounts to
customers, others customers would necessarily face surcharges.  In
response, Mercury and its representatives have, on several occasions,
attempted to refute this analysis by suggesting that instead of imposing
any surcharges under Prop 17, insurance companies would lower
everyone’s rates so nobody would be punished.  This rate increase shows,
instead, that the opposite is more likely true.  Rather than lowering
rates to avoid surcharging drivers as Prop 17 would require, Mercury
plans to increase rates ahead of Prop 17 to avoid giving any customers
any real discounts.

“The insurance company promising that Prop 17 will give drivers
discounts is actually trying to raise its customers’ premiums first.
 Only an insurance company like Mercury could try and sell a policy as
worthless as that,” said Heller.

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For more information, please visit: http://StopProp17.org
or find us on twitter at: http://twitter.com/stopmercury
and facebook at: http://www.facebook.com/stopprop17