"It is vital that insurance companies put their customers first," said Commissioner Poizner. "I'm pleased that Mercury has agreed to this settlement, which demonstrates that claims handling violations will not be tolerated in California. Mercury recently announced that it is reducing rates for policyholders, and I am hopeful that the company will continue to put its customers first. The Department of Insurance continues to make sure that all insurance companies are obeying the laws in place to protect consumers. "
The California Department of Insurance (CDI) conducted a review of consumer complaints filed with the Department against Mercury Insurance, Mercury Casualty, and California Automobile Insurance Companies, collectively known as Mercury Insurance Group. Of the 121 files reviewed, a total of 258 violations were discovered to have occurred from January 2004 through December 2005. These violations involved several of the company's claims-handling practices, including unreasonable delays in affirming or denying coverage and issuing claim payments.
Mercury Insurance Group will pay the Department of Insurance $250,000 in monetary penalties, as well as $50,000 for CDI's legal fees and enforcement costs associated with the case. Additionally, if Mercury Insurance does not improve its performance standards - as evidenced by a 15% reduction in justified complaints - by December 31, 2008, it may be ordered to pay an additional $200,000.