The Mercury Insurance Group is facing possible fines from the state of California for overcharging for auto insurance premiums. Mercury is California’s 4th largest automobile insurer. The state alleges that Mercury acted in violation to state laws concerning the pricing and selling of California auo insurance policies. Mercury is being charged with failing to ensure that motorists who were involved in accidents, but we’re not at fault, were not subjected to policy premium increases. The inquiry will determine how many, if any, policyholders have been affected. The California Dept of Insurance claims that thousands of residents may have been overcharged.
The state investigation is also aimed at determining whether or not Mercury refuse to cover artists, bartenders and other individuals who work in professions that they deemed uninsurable. Such individuals were subjected to far stricter underwriting practices. While thousands of separate charges are possible, Mercury may possibly incur minimal fines of $5000 for each individual instance of overcharging or discriminating.
Steve Poizner, California Insurance Commissioner, stated, “Mercury Insurance has disregarded California’s consumer protection statutes and overcharged consumers. In addition, the department’s examination finds that Mercury Insurance has apparently continued to violate the law despite agreements with the state to terminate its illegal behavior.”
On the other side of the coin, Coby King, Mercury spokesperson, says that Mercury has in fact not violated any insurance laws. He states that the company has not overcharged policyholders. Further, he states that the policy for denying insurance to individuals of certain high-risk occupations has not been practiced for over a decade. He claims that Poizner leaked the report in order to enhance the success of his efforts to obtain the republican gubernatorial nomination for the state. He stated, “This report appears to have been leaked to reporters in a manner designed to further the political interests of the commissioner, not the people of California”.
Of course, any political motivation for the inquiry against Mercury are firmly and quickly denied by the Department of Insurance. Darrel Nig, department spokesman, stated, “The Department of Insurance takes very seriously its role in ensuring that insurance companies follow the law. Mercury should spend less time imagining conspiracy theories against them and more time following California’s consumer protection statutes.”
Coincidentally, the Mercury Insurance Group has been diligently fighting to have a portion of the state’s insurance laws rewritten and has initiated a motion for the June ballot. Further, it has dedicated more than $3.5 million into backing up Proposition 17. Proposition 17 would make it lawful for insurers to offer significant discounts to new policy purchasers who show no gaps in coverage with their previous auto insurance company. This is believed to accommodate more desirable rates for auto insurance for thousands of customers. The opposition, most likely those who have gaps in their coverages, claim that Proposition 17 would cause rate increases for those who are already paying sky-high insurance rates.
As the California gubernatorial race kicks in the higher gear, it sure that the Mercury inquiry will bring further exciting developments.