Please ensure Javascript is enabled for purposes of website accessibility
Mercury Insurance Agrees to Pay California a Record $41M
gvw_ap_news
By Associated Press
Published 5 years ago on
October 2, 2019

Share

SACRAMENTO — Mercury Insurance Co. is ending its two-decade battle with California regulators over extra fees charged to customers by agreeing to pay the state more than $41 million, California Insurance Commissioner Ricardo Lara said Wednesday. He said it’s the largest property and casualty penalty and interest payment in the history of the state Insurance Department’s history.
The settlement came after the state Supreme Court last month declined to hear the company’s appeal from a lower court decision.
The company said it is the fourth largest private passenger automobile insurer in California, with assets over $4 billion. It also provides automobile insurance in Arizona, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas and Virginia.
A state appeals court in May reinstated a $27.6 million fine issued to Mercury by the Department of Insurance in 2015 for allegedly charging its customers illegal fees.
The department said Mercury allowed its auto insurance agents to charge up to $150 in unapproved fees on top of state-approved premiums. The company collected more than $27 million in fees on more than 180,000 transactions from 1999 to 2004, the department said, though Mercury argued that the costs were legal broker fees.
A judge in Southern California’s Orange County overturned the fine in 2016, but the state’s Fourth District Court of Appeal ruled that Mercury agents were not brokers and as a result could not charge the fees.
Mercury advertised that its rates were lower than competing insurance companies, without disclosing that it charged alleged illegal broker fees on top of the rates, Lara said. That gave agents an incentive to place policies with Mercury, even if a competitor’s policy would have been cheaper for the consumer.

Mercury Also Settles Allegation of False Advertising

“Mercury’s illegal actions misled consumers and undercut competitors, which gave them an unfair advantage in the insurance marketplace,” Lara said in a statement.

“Mercury’s illegal actions misled consumers and undercut competitors, which gave them an unfair advantage in the insurance marketplace.” — California Insurance Commissioner Ricardo Lara
The $41.2 million settlement includes an additional $8.1 million in interest plus an additional $5.5 million payment to settle an allegation of false advertising that had not yet gone to trial, Lara said. That stems from the state’s argument that Mercury advertised its premiums were lower than other insurers, though they were actually higher because of the alleged illegal fees.
“This was a hard fought legal battle to protect consumers … and make sure all insurers play by the rules in California. No insurance company is above the law,” Lara said in a statement.
Mercury in an emailed statement said the actual fine assessed to close the case is $500,000 because it already paid the original fine of $27.6 million. The company said the rest of the money was for interest and costs associated with the case.
The company said it “decided to settle this case so we can move forward” and that the settlement was in the best interests of its customers, employees and other stakeholders.
Mercury added that “the fees at the heart of this dispute were charged and collected by independent brokers for the services they provided to their customers.”
Most of the money will go to California’s general fund. However, nearly $5 million will go to reimburse a special insurance fund used to enforce state insurance laws, meaning Mercury paid the state’s legal and court costs, Lara said.

DON'T MISS

Wired Wednesday: Construction Workers on 2018 Fresno Unified Project Still Not Paid

DON'T MISS

Slumping California Risks Losing World’s ‘5th Largest Economy’ Title

DON'T MISS

Ukraine Uses Long-Range Missiles Secretly Provided by US to Hit Russian-Held Areas, Officials Say

DON'T MISS

Upward Bound: Edison High’s Garcia Headed to Johns Hopkins

DON'T MISS

Boxing Star Ryan Garcia Wants to Meet Netanyahu, Pledges Aid for Gaza Children

DON'T MISS

Fong Won’t Debate Boudreaux, but We Get Hot Topic Answers Anyway

DON'T MISS

Legislation Pandering to Tribal Casinos Is a Bad Bet for Fresno Cardroom Employees

DON'T MISS

About 1 in 4 US Adults Over 50 Say They Expect to Never Retire, an AARP Study Finds

DON'T MISS

Biden Signs a $95 Billion War Aid Measure With Assistance for Ukraine, Israel and Taiwan

DON'T MISS

Ancestry Website to Catalogue Names of Japanese Americans Incarcerated During World War II

UP NEXT

Ancestry Website to Catalogue Names of Japanese Americans Incarcerated During World War II

UP NEXT

Sacramento Bee Accused of Mangling the Facts About Fish Caught in Pumps

UP NEXT

Google Fires More Workers Who Protested Its Deal With Israel

UP NEXT

CA Lawmakers Reject Bill Cracking Down on Utilities Spending Customers’ Money

UP NEXT

What Do Supreme Court Justices Say About Homelessness?

UP NEXT

Oprah Winfrey and Dwayne Johnson Pledged $10M for Maui Wildfire Survivors. They Gave Much More.

UP NEXT

Work Starts on Bullet Train Line From Las Vegas to LA

UP NEXT

Will CA Lawmakers Crack Down on Spending by Utility Companies?

UP NEXT

Los Angeles Mayor Karen Bass Safe After Suspect Breaks Into Official Residence, Police Say

UP NEXT

Newsom Wants to Make It Easier for Arizona Women to Get a California Abortion

Upward Bound: Edison High’s Garcia Headed to Johns Hopkins

Local Education /

4 hours ago

Boxing Star Ryan Garcia Wants to Meet Netanyahu, Pledges Aid for Gaza Children

4 hours ago

Fong Won’t Debate Boudreaux, but We Get Hot Topic Answers Anyway

4 hours ago

Legislation Pandering to Tribal Casinos Is a Bad Bet for Fresno Cardroom Employees

5 hours ago

About 1 in 4 US Adults Over 50 Say They Expect to Never Retire, an AARP Study Finds

5 hours ago

Biden Signs a $95 Billion War Aid Measure With Assistance for Ukraine, Israel and Taiwan

6 hours ago

Ancestry Website to Catalogue Names of Japanese Americans Incarcerated During World War II

6 hours ago

First-Round Picks Could Be on the Trading Block on Day 1 of the NFL Draft

7 hours ago

Trojans Rejoice! Reggie Bush Is Reinstated as 2005 Heisman Trophy Winner

7 hours ago

Arizona Just Revived an 1864 Law Criminalizing Abortion. Here’s What’s Happening in Other States

7 hours ago

Wired Wednesday: Construction Workers on 2018 Fresno Unified Project Still Not Paid

GV Wire reporter Edward Smith explores a situation with KMPH Fox 26 “Great Day” anchor Jim De La Vega in which 22 construction workers haven...

15 mins ago

15 mins ago

Wired Wednesday: Construction Workers on 2018 Fresno Unified Project Still Not Paid

27 mins ago

Slumping California Risks Losing World’s ‘5th Largest Economy’ Title

2 hours ago

Ukraine Uses Long-Range Missiles Secretly Provided by US to Hit Russian-Held Areas, Officials Say

Local Education /
4 hours ago

Upward Bound: Edison High’s Garcia Headed to Johns Hopkins

4 hours ago

Boxing Star Ryan Garcia Wants to Meet Netanyahu, Pledges Aid for Gaza Children

4 hours ago

Fong Won’t Debate Boudreaux, but We Get Hot Topic Answers Anyway

5 hours ago

Legislation Pandering to Tribal Casinos Is a Bad Bet for Fresno Cardroom Employees

5 hours ago

About 1 in 4 US Adults Over 50 Say They Expect to Never Retire, an AARP Study Finds

MENU

CONNECT WITH US

Search

Send this to a friend