Controversial Auto Insurer May Have Violated the Law

Mercury Insurance Group has been in the middle of a lot of controversy since backing the controversial auto insurance initiative that would penalize drivers whose insurance coverage lapsed. Now, the California insurer is in the news for allegedly having engaged in practices that may be illegal, including deceptive pricing and discrimination against certain consumers.

Report from the State Department of Insurance

Recently, a 275-page report by the state Department of Insurance was authorized for release by California’s Insurance Commissioner, Steve Poizner. In the report are documents covering the firm’s practices from the mid-90s to 2004.

Some details of the report explain that Mercury may have violated state laws by:

  • Charging higher rates: Some consumers were flagged for higher rates if they had been in an accident, even if it was not their fault.
  • Delaying coverage to specific consumers: Mercury was said to be guilty of not immediately granting coverage to specific applicants, including military personnel on active duty, artists, those employed in the entertainment industry as actors, dancers, and emergency vehicle drivers.
  • Unfairly raising premiums: The company was said to raise insurance premiums after its quoting prices for discounts for which the consumer was not eligible.
  • Collecting too-high premiums: Mercury was found to collect higher premiums than allowed by law by requiring its brokers to return part of their fees to the company.

On the whole, state officials said the report uncovered 25 issues or questionable practices conducted by the insurer. To date, seven of them remain unsolved.

Will Support for Insurance Initiative Falter?

A spokesperson from Mercury was recently quoted as saying that consumer groups will very likely use the report to “muddy the waters” when it comes to the auto insurance initiative that was approved for the June 2010 California ballot.

The company disputes the state’s findings and despite the report plan to continue their push to back the initiative.

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