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Monday, 07 October 2019 13:19

Mercury Paying $41M in Long Court Battle With California Insurance Department

Written by Staff, Insurance Journal


Mercury Insurance Co. has agreed to pay more than $41 million to end a two-decade-long battle with the California Department of Insurance battle over the Los Angeles-based carrier improperly tacking fees onto auto insurance policies and over false advertising claims.


The payment resulted from a record $27.6 million penalty plus $8.1 million interest, making it reportedly the largest property/casualty payment in CDI history.


The battle between Mercury and the CDI was fought up to the California Supreme Court, which in August rejected Mercury’s request for review of the case.


According to the CDI, Mercury agreed this week to pay the penalty, plus interest, and to settle a second phase that had not yet been tried in the courts. The second phase involved false advertising claims the department was preparing to prosecute under the Unfair Insurance Practices Act.


“This historic settlement shows the Department of Insurance is steadfast in its fight to protect consumers, defend Proposition 103 and make sure insurers play by the rules,” Insurance Commissioner Ricardo Lara said in a statement. “When something sounds too good to be true, it usually is. Mercury made profits by ignoring the rules, and in California, no insurance company gets a free pass.”


A Mercury spokesman provided the following statement:


“The Superior Court of California resoundingly ruled in Mercury’s favor on three different grounds. This ruling was later inappropriately reversed by the appellate court, but we have decided to settle this case so that we can move forward to focus on providing California consumers the tremendous value they’ve come to expect for the past 58-plus years from Mercury.”


The Mercury spokesman in defense of the carrier also provided a number of bullet points:


  • The Court of Appeal, in an unprecedented and poorly-reasoned opinion, reversed the Superior Court’s decision, allegedly because the Superior Court did not give proper deference to the Commissioner, even though the Superior Court expressly acknowledged its requirement to give a “strong presumption of correctness” to the Commissioner’s findings.
  • In spite of that presumption, the Superior Court found that the Commissioner’s allegations were not supported by the evidence and ruled in Mercury’s favor.

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