Santa Monica, CA — Mercury Insurance Chairman George Joseph launched another assault on consumer protections guaranteed by the 1988 insurance reform measure Proposition 103. The California Secretary of State reports that Joseph is the sole donor to the signature gathering campaign for a new Mercury Insurance backed ballot initiative that would legalize surcharges by Mercury and other insurance companies. The measure would repeal Proposition 103's prohibition on auto insurance companies from considering a driver’s coverage history when a motorist applies for insurance.
In 2003, Mercury Insurance was found to be considering prior insurance coverage and imposing an illegal surcharge in California until it was ordered to stop by regulators and courts. 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.
“Mercury Insurance and its Chairman George Joseph are back with another attempt to strip California motorists of longstanding consumer protections," said consumer advocate Brian Stedge of Consumer Watchdog. "Mercury has hired a new front group for this year's attack, but it should be clear to Californians that no matter what they call it, this measure is just another Mercury Insurance power grab."
George Joseph’s down payment on the signature gathering went to a political action committee called The 2012 Auto Insurance Discount Act, Sponsored by the American Agents Alliance with Support from California Insurance Providers for Competitive Prices and Consumer Discounts. The Agents Alliance, whose executive director was a spokesman for Mercury's 2010 initiative, is effectively run by Mercury Insurance with over 70% of the board being Mercury 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.
Last year, editorial boards across the state described Mercury's Proposition 17 as:
"a special interest scam" – San Jose Mercury News
"a daunting additional cost for those who are desperate to get coverage" – San Francisco Chronicle
"designed to fool voters" – Contra Costa Times
"won't 'fix' anything" – Los Angeles Times
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.
“The last thing Californians need is another self-serving ballot initiative by a corporation hell bent on increasing its profit margins on the backs of already struggling families,” said Brian Stedge.
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