California’s insurance commissioner has issued a notice of disobedience against Mercury Insuranceclaiming the company violated consumer protection laws by selling its cheapest policies to “good drivers” instead of the cheapest policies they were eligible for.
This follows a department investigation that found multiple areas where Mercury’s practices damaged business owners in its personal auto, commercial vehicle, homeowner and general insurance companies, officials said.
The analysis was based on a review of policies that were submitted, revised, withdrawn, not modified, or rejected during a random selection period from April 1, 2014 to June 30, 2014. This included 293 policies and 496 were terminated and rejected. process.
“Failure to sell good drivers the lower prices they deserve is illegal, and my department will take action on behalf of consumers and pursue serious penalties against Mercury for its misconduct,” Insurance Commissioner Ricardo Lara said in a statement released Monday. .
Mercury representatives could not be reached for comment Monday.
Lara said that Mercury’s actions are breaking 103 thoughtsA 1988 voter-approved act that mandates a 20% “good driver discount” for buyers who maintain a good driving record.
Consumer Watchdog founder Harvey Rosenfield said the information did not come as a surprise.
“Mercury knows full well that this is illegal because it has tried to change the law for two decades,” Rosenfield said in a statement. “Today’s action by the insurance executive is the first step in holding this recovery company accountable for willful violations of the law.”
A Los Angeles consumer group is urging Commissioner Lara to revoke Mercury’s license to do business in California.
Mercury maintains two insurance companies in California: Mercury Insurance Co., which focuses on “good drivers” with low rates, and California Automobile Insurance Co., Ltd.who pay higher prices for an almost identical spread.
The department’s investigation found several ways in which Mercury sold and steered drivers to his company illegally with a system of inflated prices:
- Directing agents to offer quotes on its expensive plans using low mileage, creating a low profile to attract buyers.
- Telling agents to refuse to sell a cheap policy if a good driver has been dismissed for not paying enough money or has been involved in an accident that was not their fault, and nothing is allowed under the law.
- Only offer a monthly payment option in a higher price plan
- Deterring good drivers from switching to a cheaper plan with misleading language on options that are the same.
- Falsely stating that all plans charge a fee, when in fact only the premium plan charges a fee
- Submitting good drivers without prior coverage to different types and conditions from other drivers
The department also alleges that Mercury overcharged businesses and homeowners in certain lines of insurance through various illegal means that resulted in discrimination.
For example, the company increased the amount paid to commercial drivers who were involved in accidents where they were not at fault.
The offenses – 34 in all – are detailed in a notice issued by the anti-corruption department.
Mercury paid a $27.6 million fine in August 2019 for similar charges. It was the largest fine paid by a property and casualty insurer in the department’s history. The California Supreme Court upheld that decision, finding that Mercury charges consumers unfairly and unfairly discriminatory, Lara said.
No fines have been set for Mercury’s latest violation, department officials said.