Sacramento Bee Ad Watch Says Prop 33 TV Ads “Mislead”

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The insurance billionaire behind Prop 33 is asking California voters to believe that he wants to overturn laws that have protected consumers for 24 years to save consumers money. Consumer Watchdog Campaign today released the “Top Five Reasons You Can’t Trust Mercury Insurance,” outlining the company’s troubling history as a renegade insurance company that routinely defies the law and abuses consumers, as reasons this insurance executive and his company can’t be trusted.

Also today, a Sacramento Bee Ad Watch analysis found that a Prop 33 TV ad is “misleading,” because it hides the fact that it will raise rates on good drivers who have a break in their insurance for almost any reason, and because it “features a testimonial from a motorist without disclosing she works for Proposition 33’s campaign team.”

Read the Sacramento Bee story

Mercury Insurance chairman George Joseph has spent $16 million on Prop 33.

“The lies in the Prop 33 ads are the latest but not the last in Mercury Insurance’s long history of deceiving and abusing consumers, and willfully breaking the law to boost its own bottom line at the expense of its customers. Voters should be warned that they can’t trust a word this insurance billionaire says about Prop 33, or a single TV sound bite coming from his $16 million campaign to fool the public,” said Carmen Balber with Consumer Watchdog Campaign.

The California Department of Insurance stated in an agency enforcement action against Mercury: “Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference.”

Find that statement here (Page 4)

The Top Five Reasons You Can’t Trust Mercury Insurance:

1. Discriminatory auto insurance pricing. According to a California Department of Insurance investigation Mercury repeatedly overcharged, cancelled, refused to sell insurance or made insurance more difficult for people to buy, based on customers’ military status, occupation, health, marital status, employment status, prior accidents that were not the driver’s fault, prior insurance coverage and other illegal criteria.

Read the San Francisco Chronicle story here

2. Hiked auto insurance rates by $63 million. Mercury just raised rates on 990,000 auto insurance customers by $63 million, an average 4% rate hike that will take effect by the end of 2012, even as the company promises discounts under Prop 33.

Find the details of the rate increase here

3. Charged customers illegal broker fees. Mercury allowed its insurance agents to charge illegal broker fees to unsuspecting customers until forced to stop by a California court. The company would advertise one price to customers, and invite them to compare it to other insurers, but not reveal that an additional, illegal broker fee would be added to the final price.

Learn more about the case here

4. Low-balling and delaying accident claims. An internal training manual produced in a civil trial shows Mercury Insurance trained employees to mistreat, neglect and even threaten customers who file claims.

A portion of the instructional guide was disclosed as part of a 2006 lawsuit against the company by a Los Angeles business that sued Mercury for failing to properly pay a claim. Internal training guides shown to jurors instructed Mercury claims adjustors to low-ball customers, drag out their claims and remind them they could be found at fault in a trial.
Download the Daily Journal article about the lawsuit here

5. Illegally raising rates. Mercury illegally surcharged hundreds of thousands of drivers based on their history of insurance coverage, the same surcharge Prop 33 would impose, until the Department of Insurance and the courts ordered it to stop.

When Prop 33 proponents claim a continuous coverage discount was in effect in California from 1996-2002, they are referring to these years when Mercury was breaking the law. Mercury’s own customers sued the company and the Court of Appeal put an end to the practice in 2005.

Read more about the case, Donabedian v. Mercury, here

Proposition 33 would allow insurance companies to raise rates on Californians with perfect driving records if they had a break in their insurance coverage for almost any reason, even if they weren’t driving and didn’t have a car. It targets millions of Californians for higher auto insurance rates, including students, mass transit users, the long-term unemployed and the disabled who stop driving for good reasons and then need to get back on the road.

Nearly every newspaper editorial board in the state has urged a No vote on Prop 33. Read their recommendations here

Mercury Insurance sponsored an almost identical initiative just two years ago, Prop 17, which was rejected by voters 48 – 52.

For more information on Prop 33 visit: http://stopprop33.consumerwatchdogcampaign.org/