Mercury Insurance Chairman Dumps $8 Million into Campaign To Allow New Auto Insurance Surcharges

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Santa Monica, CA — Mercury Insurance Chairman George Joseph continues his decades-old assault on consumer protections guaranteed by the 1988 insurance reform measure Proposition 103.  The California Secretary of State reports that Joseph gave nearly $8.1 million to a political action committee aiming to place an initiative on the June ballot that would legalize new, and currently illegal, auto insurance surcharges by Mercury and other insurance companies.  The measure would repeal Proposition 103's prohibition on insurance companies from considering a driver’s coverage history when a motorist applies for insurance.

George Joseph, who has now spent more than $8.1 million on this initiative, is the sole donor to the deceptively named committee, The 2012 Auto Insurance Discount Act, sponsored by the American Agents Alliance with support from California Insurance Providers for Competitive Prices and Consumer Discounts.  Over the years, Mercury has unsuccessfully attacked several provisions of Proposition 103 aimed at protecting drivers from excessive rates and unfair discrimination.

“Mercury Chairman George Joseph does not care that voters already rejected his deceptive campaign in 2010.  He is determined to destroy consumer protections that have saved California drivers over $62 billion,” stated consumer advocate Brian Stedge of Consumer Watchdog.  “The question is simple, would an insurance chairman spend over $8 million to give drivers a discount?  The truth is that Mercury will spend tens of millions of dollars in order to raise prices, not lower them.”

In 2003, Mercury Insurance was caught considering prior insurance coverage and imposing an illegal surcharge in California until regulators and courts ordered it to stop.  In 2010, Mercury sponsored Proposition 17, which would have allowed the surcharge, and spent $16 million on a deceptive but losing effort for that initiative.  That proposition, which was roundly criticized as a special interest power grab, was virtually the same as the proposed measure Mercury is now circulating.

George Joseph’s financing of the measure belies the phony committee name he hopes will confuse voters.  The so-called “Agents Alliance,” is actually run by the spokesman for Mercury's 2010 initiative and has a Board of Directors in which 70% of the members are Mercury insurance agents, as of the Alliance's most recent corporate filing, according to consumer advocates.  The group, called California Insurance Providers for Competitive Prices and Consumer Discounts, appears to be a fabrication created solely for this measure, as it does not appear to exist anywhere except within the name of this committee.

The current proposal, like Proposition 17, would repeal Proposition 103's ban on considering a driver's insurance coverage history when setting rates and premiums.  It would allow insurers to surcharge customers who had not purchased auto insurance at some point during the past five years, whether or not they had been driving.  Consumer Watchdog estimates that those surcharges would increase premiums by as much as 40% or more for millions of Californians including students who went away for college, Californians who previously used mass-transit, and the long-term unemployed.

Mercury Insurance has been prosecuted in civil courts for violating this provision of Proposition 103 that it now seeks to override.  In 2003, when Mercury was illegally imposing the surcharge in California, Consumer Watchdog demonstrated that Mercury surcharged drivers without prior coverage by 41%.  The company also has a long history of anti-consumer practices.  In a regulatory filing relating to Mercury's illegal practices, the California Department of Insurance has written:

Mercury’s lengthy history of serious misconduct, and its attitude – contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court – are all relevant to determining the penalty needed to best ensure the protection of the public from future violations and wrongdoing… Among Department [of Insurance] staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference.

“This measure is just another Mercury Insurance power grab and an abuse of our ballot initiative process from a company that refuses to play by the rules,” stated Brian Stedge. 

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Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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