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Mercury Insurance policy accused of overcharging ‘good drivers’ in California

California’s insurance policy commissioner has issued a observe of noncompliance versus Mercury Insurance policy, alleging the firm violated purchaser security legal guidelines by marketing its best-priced plan to “good drivers” in its place of the most affordable-priced plan for which they certified.

The motion follows a department investigation that found numerous areas in which Mercury’s small business methods harmed policyholders across its non-public passenger auto, business vehicle, property owners and professional multi-coverage lines of insurance policy, office officers reported.

The investigation was based mostly on a evaluate of policies issued, renewed, cancelled, non-renewed, or declined through a randomly chosen time period running from April 1, 2014 to June 30, 2014. That integrated 293 in-drive procedures and 496 terminated and declined procedures.

“Failing to offer great motorists the most affordable priced policy for which they qualify is unlawful, and my section will act on behalf of consumers and go after the maximum penalties in opposition to Mercury for performing in lousy religion,” Insurance policy Commissioner Ricardo Lara stated Monday.

In a assertion launched late Monday, Mercury explained it “strongly disagrees with the allegations.”

“The firm has been performing in very good faith with the (California Division of Insurance) to deal with their problems, and in spite of the company’s belief that it has not violated any legislation, the organization has executed a lot of operational adjustments at the ask for of the CDI,” the insurance provider explained.

Lara stated Mercury’s steps violate Proposition 103, a 1988 voter-accredited initiative that mandates a 20% “good driver discount” for buyers who manage a protected driving file.

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Buyer Watchdog founder Harvey Rosenfield said the notice came as no surprise.

“Mercury is nicely-informed this is illegal mainly because it has tried using to modify the legislation for two a long time,” Rosenfield claimed in a statement. “Today’s enforcement motion by the insurance policies commissioner is the initially step in eventually holding this recidivist company accountable for its deliberate legislation-breaking.”

The Los Angeles-primarily based customer group is urging Commissioner Lara to revoke Mercury’s license to do company in California.

Mercury maintains two insurance policy providers in California: Mercury Insurance plan Co., which targets “good drivers” with lower fees, and California Automobile Coverage Co., which rates better charges for practically identical protection.

The department’s investigation observed a quantity of strategies that Mercury illegally offered and steered drivers to its firm with the higher-priced system:

  • Directing agents to deliver rates for its higher-priced plan applying artificially reduced mileage, offering the physical appearance of lessen rates in purchase to entice individuals
  • Directing brokers to refuse to promote a lower-priced plan if a superior driver had been cancelled for non-payment of a premium or experienced an accident for which theey ended up not at fault, neither of which is permitted below legislation
  • Only giving a monthly payment selection in the greater-priced plan
  • Dissuading very good drivers from switching to the lower-priced system with deceptive language for the just about similar choices
  • Falsely representing that equally programs charge coverage costs, when in point only the bigger priced plan cost the charges
  • Subjecting very good motorists with out prior protection to distinct conditions and circumstances than other drivers
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The office also alleges Mercury overcharged businesses and house owners in other strains of coverage as a result of a wide variety of unlawful methods that resulted in discriminatory costs.

As an illustration, the corporation increased rates for industrial motorists who had been in an accident wherever they were being not at fault.

The allegations – 34 in all – are thorough in the department’s discover of noncompliance.

Mercury paid a $27.6 million good in August 2019 for similar violations. It was the premier fantastic towards a home and casualty insurance provider in the department’s historical past. The California Supreme Court upheld that action, finding Mercury charged people unapproved and unfairly discriminatory premiums, Lara reported.

No good volume has been established for Mercury’s newest violations, department officers said.

Mercury stated it will keep on to work with the Division of Insurance policy to take care of any remarkable challenges and settle the subject. But if that’s not probable, the firm claimed “it will defend itself by the judicial approach.”

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