Consumer Watchdog Campaign: Ca. Dept. of Insurance Caught Prop 33 Backer Mercury Insurance Discriminating Against Members of the Military

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Santa Monica, CA — Consumer advocates today produced evidence that Mercury Insurance company, the backer of Prop 33, discriminated against members of the military by overcharging or refusing to sell them auto and homeowners insurance policies.

Prop 33 on next week’s ballot would roll back a 24-year old consumer protection in California and allow insurance companies to discriminate against new drivers and those who have a lapse in coverage for almost any reason by raising their insurance rates by 40%. Those drivers who would be hit with a massive insurance surcharge under Prop 33 include veterans, foreign service workers, the families of military members and others who stop driving for good reason, then need to buy auto insurance when they get back on the road.

“These disclosures paint a clear picture of an insurance company willing to break the law to discriminate against drivers they don’t want to insure at a fair price, including members of the military, their families, veterans and others who stop driving for a time. Prop 33 will allow insurance companies to discriminate against and increase insurance premiums for almost any Californian, except for the few people the drafters exempted because the political heat for surcharging them was too high. The rest of California doesn’t deserve these unfair surcharges any more than our men and women in uniform do,” said Harvey Rosenfield, founder of Consumer Watchdog and author of insurance reform Proposition 103.

A California Department of Insurance market conduct examination that found that Mercury Insurance included members of the military on a list of 26 “unacceptable” occupations, and used other tactics to overcharge or refuse to sell them auto and homeowners insurance policies.  Download the pages excerpted from the investigative report:

Prop 33’s insurance industry backers claim it protects members of the military but even wrote their loophole wrong, said Consumer Watchdog Campaign, because military spouses, foreign service workers, and veterans are all surcharged if they had a legitimate break in their auto insurance coverage.

Prop 103, approved by voters in 1988, prohibited auto insurance companies from refusing to cover, or charging exorbitant rates to, new drivers or those with a break in their insurance coverage.

Before Prop 103 was enacted, insurance companies used this discriminatory tactic to redline urban and lower-income neighborhoods. As the Los Angeles Times reported in 1986:

“Many signing up for insurance for the first time were refused coverage and forced to buy through the assigned risk plan. And many companies apparently are not interested in new clients in poor neighborhoods. The result is that in these areas, such as minority communities on Los Angeles' Eastside and Southside, it is hard to find insurance sales offices, even if one wants a policy and can afford it."
Low-income and civil rights advocates came together to challenge the practice in a 1987 lawsuit, King v Meese. When the California Supreme Court acknowledged the discrimination but did not act, consumer advocates placed Prop 103 on the ballot to outlaw the practice.

Download the factsheet outlining the history of King v Meese and auto insurance discrimination based on insurance history:

Proposition 33 targets with higher rates:

·      Graduating students entering the workforce;

·      Foreign service workers and veterans;

·      People who dropped their coverage while recuperating from a serious illness or injury that kept them off the road;

·      Californians who previously used mass-transit; and,

·      The long-term unemployed.

For more information on why to Vote No on Prop 33 visit:

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Jamie Court
Jamie Court
Consumer Watchdog's President and Chairman of the Board is an award-winning and nationally recognized consumer advocate. The author of three books, he has led dozens of campaigns to reform insurance companies, financial institutions, energy companies, political accountability and health care companies.

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