Mercury Insurance Bill Seeks to Restrict Insurance Commissioner’s Authority to Prevent Abuses
Santa Monica, CA — Advocates for low-income communities in California say that a proposal from Senate leader John Burton would lead to an explosion of unfair and discriminatory practices by insurance companies, hurting the poor and undermining economic development in low-income communities. The bill, SB 1291, would allow every insurance company to violate the law anytime the California Department of Insurance (CDI) mistakenly approved an illegal practice hidden in a thick regulatory filing by any single insurance company. Under the proposed law, which is expected to be considered by the Senate in coming days, the illegal conduct could continue throughout the industry until a court, or a formal CDI proceeding, put an end to it.
Public Advocates and the California Reinvestment Committee, which sent a letter to Senator Burton today (click here to read the letter), warned that the bill would encourage insurers to bury discriminatory practices in some of the thousands of voluminous filings they submit to the CDI each year, in order to enshrine such practices with temporary legal status. The low-income advocates note that illegal practices are not always caught by regulators and if one company managed to sneak an unfair practice through the process, it would signal a green-light to all other insurers that they can violate the law.
“SB 1291 would hurt consumers by magnifying every regulatory failure by staff at the California Department of Insurance (CDI) — whether intentional or inadvertent,” wrote Public Advocates and the California Reinvestment Committee in a letter sent to Senator Burton today. “Its effect will be to endow these regulatory failures, at least temporarily, with an unwarranted legal status. And the burden of that newly-enshrined status will fall most heavily — as the burden of unfair insurance practices and redlining has always fallen — on low-income communities and communities of color.”
SB 1291 is supported by Mercury Insurance, which sponsored SB 841 last year, a bill would have allowed insurance companies to impose surcharges on drivers who had been previously uninsured. That law was found to be an illegal violation of voter-approved Proposition 103 in a Los Angeles Superior Court ruling earlier this year.
The groups describe SB 1291 as another “attempt to roll back Proposition 103 and open a wedge for deregulating the insurance markets that are critical to economic development, particularly in low-income communities.”