Santa Monica, CA — The California Department of Insurance (CDI) today
said that Mercury Insurance Company, the sponsor of Proposition 17, has
overcharged and discriminated against California customers for over
fifteen years, including failing to deliver discounts required by state
law and imposing unlawful surcharges.

Consumer advocates said that the new CDI report is certain to affect
voters’ view of Proposition 17, Mercury’s controversial initiative on
the June ballot.

“This troubling report shows that Mercury Insurance has overcharged
its policyholders for a decade and half, but now it wants the voters to
believe it is spending millions on Proposition 17 to charge less for
auto insurance,” said Harvey Rosenfield, author of insurance reform
Proposition 103 and founder of Consumer Watchdog. “These new revelations
show Mercury Insurance’s promise that Proposition 17 will lower
premiums is like Bernie Madoff backing a ballot proposition to protect
investors.”

CDI announced that it filed an administrative lawsuit against Mercury
last Friday and gave it ten days to correct every violation of law
identified in its investigation or face massive fines.  The lawsuit and
underlying investigation can be downloaded at: http://bit.ly/afestj

In its latest investigation, which began in March, 2007, CDI found that
Mercury improperly applied surcharges to its customers, failed to give
customers the discounts they were due, discriminated against people with
certain medical conditions, and refused to insure applicants based on
their occupation.

The Department also determined that Mercury had violated its own
agreement to stop violations that were uncovered by CDI investigations
completed in 1998 and 2002. More information about those investigations
is available here:  http://www.consumerwatchdog.org/insurance/articles/?storyId=32615

“How can voters trust an insurance company that violated its own promise
to regulators to stop breaking the law?” Rosenfield asked. “This report
should be the nail in Prop 17’s coffin. Voters won’t stand for a lying
insurance company deceiving them once again.”

Mercury wrote, and has spent $3.5 million on, Proposition 17 on the
June ballot, which would allow insurance companies to add a new
surcharge on drivers’ premiums based on whether or not they previously
purchased auto insurance, even if they didn’t drive, or missed an
insurance payment. The company’s commercials are telling people that
Prop 17 would lower auto insurance premiums.

Among the 54 practices identified by the CDI in today’s report as
potential violations of state law are numerous practices that violate
Proposition 103, the 1988 voter approved insurance reform measure that
Mercury’s Proposition 17 targets.

Among the practices uncovered by state investigators:

• Mercury continues to surcharge certain people (by 15%) who are
required to carry proof of insurance coverage – a violation of existing
law. Mercury’s Proposition 17 would legalize such surcharges and allow
insurance companies to apply them across the board.

• Mercury fails to give customers the discounts they are entitled to
under state law.

• Mercury instructed its agents to refuse to sell binding coverage to
people who are handicapped or whose health is impaired.

• Mercury charges people for accidents for which they were not at
fault.

• Mercury refuses to sell insurance to artisans who are good drivers,
or to painters, cocktail waitresses, waiters and bartenders who are not
eligible for good driver status.

• Mercury prematurely cancelled policies issued to people entitled to
buy inexpensive policies under the Low Cost Automobile Insurance Plan –
even though Mercury claims that the availability of such policies will
lessen the impact that Prop 17 will have on uninsured motorists.

In addition to illegal overcharging of its customers and other
misbehavior by the company identified by the CDI, Mercury Insurance has
consistently received among the lowest J.D. Power rankings among large
insurers. In the most recent survey, available at http://bit.ly/9WyEbv ,
Mercury was ranked 27 of 32 companies in terms of overall customer
satisfaction.

– 30 –

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