California Voters Reject Mercury General-Funded Ballot Question

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SACRAMENTO, CA — California voters rejected a Mercury
General-sponsored proposition to allow insurers to extend automobile
insurance discounts to more drivers despite the company having 15-to-one
spending advantage.

Proposition 17 lost by a 52.1% to 47.9% margin, 2,004,410 to
1,848,768, according to unofficial results from the California Secretary
of State’s office.

The outcome was a victory for consumer groups that argued the
referendum would effectively legalize surcharges outlawed since the
passage of Proposition 103 in 1988. Because those with lapses in
coverage or payments would be disqualified from discounts, the
initiative would allow insurers to charge those customers more, they

While the Yes on 17 – Californians for Fair Auto Insurance Rates
campaign touted the support of 100 organizations, Mercury General Corp.
funded virtually the entire operation. The insurer gave approximately
$16 million toward the effort.

The proposition’s failure to win despite the financing disparity
shows that voters don’t trust the insurance industry, said Jamie Court,
president and chairman of Consumer Watchdog. Court is also a board
member of the Campaign for Consumer Rights, which ran the Stop Prop 17

“It tells the insurance industry it shouldn’t be messing with the
voters, because the voters can see through their tricks,” Court said.

Mike D’Arelli, executive director of the Alliance of Insurance Agents
and Brokers, said voters missed an opportunity to save themselves
money. “There is no doubt that extending the continuous coverage
discount would have improved current auto law,” he said in a statement
from the Yes on 17 campaign.

Mercury Insurance Co. (NYSE: MCY), a member of Mercury General Group,
currently has a Best’s Financial Strength Rating of A+ (Superior).

The top five writers of private passenger automobile insurance in
California in 2009 were Farmers Insurance Group, with a 15.1% market
share; State Farm Group, 13.1%; Allstate Insurance Group, 8.8%; Auto
Club Enterprises Insurance Group, 8.8%; and Mercury General Group, 8.7%;
according to BestLink, which provides online access to A.M. Best’s
Global Insurance & Banking Database.

Contact the author at: [email protected]

Consumer Watchdog
Consumer Watchdog
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