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Top Five Reasons the Insurance Company Behind Prop 33 Can’t Be Trusted

4:45 pm in Uncategorized by Consumer Watchdog

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:

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New survey: Americans don’t want insurance rates tied to prior insurance coverage

4:16 pm in Uncategorized by Consumer Watchdog

Doug Heller

The Consumer Federation of America released a new report earlier this week assessing consumer views on the factors insurance companies use to set premiums around the country. Not surprisingly, Americans think that insurance rates should be based primarily on motorists’ driving safety record (87% and 85% of respondents believe rates should reflect a driver’s number of accidents and tickets, respectively).

More than a majority of Americans think it’s unfair to consider the ZIP-code in which you live or your occupation. More than two-thirds (68%) call it unfair to charge drivers more if they did not have insurance because they did not previously have a car. This data point should interest Californians, because there’s an initiative on the November ballot – Proposition 33 – that would allow insurance companies to penalize people based on this precise factor that 68% of Americans consider unfair.

Proposition 33 was put on the ballot by Mercury Insurance’s billionaire Chairman, and his $8 million campaign conveniently ignores the fact that the initiative allows insurance companies to raise prices on drivers who didn’t previously have insurance because they didn’t have a car. No doubt, his pollsters are telling him the same thing that the national survey reports: Americans don’t think his scheme is fair. (So if people think your initiative is unfair, your only option is to run a deceptive ad campaign filled with disingenuous patriotism and hope people can’t see the trick you’ve hidden behind that flag.)

But back to today’s report for a moment. Another interesting thing Consumer Federation did was look at rates around the country and show the effect of a variety of rating factors, including prior insurance coverage. Two things stand out:

  1. Where most companies in most states dramatically jack up the rates on customers who do not have prior insurance when they want to buy a policy, Californians’ premiums are unaffected by that factor because it is illegal to apply it in California. The whole point of Prop 33 is to make California more like these other states in a bad way.
  2. Generally speaking, rates in Los Angeles, California are both lower than the other big cities tested and more stable after testing for factors considered unfair, such as ZIP Code, occupation, prior insurance and credit scoring. In other words, the insurance reforms Californians installed through Proposition 103 in 1988 not only apply standards of fairness to the marketplace, they have created a competitive and lower priced market as well.

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Posted by Doug Heller, Executive Director of Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Consumer Group Calls On Insurance Billionaire To Withdraw Deceptive Prop 33 Advertisements

7:03 pm in Uncategorized by Consumer Watchdog

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Consumer advocates today called on the insurance company executive behind Proposition 33 to immediately withdraw new radio advertisements that mischaracterize the impact of the initiative on foreign service and military personnel in the wake of attacks on US embassies abroad.

In statewide radio advertisements paid for by Mercury insurance executive George Joseph, the Proposition 33 campaign erroneously claims soldiers will be able to keep auto insurance discounts they now lose, and that Prop 33 is about “supporting our heroes.” In fact, foreign service officers would be surcharged under the proposal for not driving while working oversees when they restart their auto insurance in California. Moreover, Prop 33 will not protect any current discount for soldiers.

In a letter sent to Mercury Chairman Joseph today, Consumer Watchdog wrote: “Out of respect for military officers and foreign service employees, who face life-threatening circumstances at our embassies abroad, we call upon you to immediately withdraw your deceptive and disrespectful radio advertising campaign in favor of Proposition 33.”

Download Consumer Watchdog’s letter here, or read text below

Listen to the Prop 33 radio ad here

A Los Angeles Times opinion staff blog published yesterday took the campaign to task for the deceptive ad: “The 30-second spot declares: ‘Proposition 33 protects our veterans and military families, and allows them to keep their discount on car insurance, saving them money.’ It would do nothing of the kind.”

Read the Times blog here:

Consumer Watchdog’s letter continued: “Your radio advertisement claims Prop 33 is about “supporting our heroes.” But under Prop 33, good drivers who have stopped driving for legitimate reasons – like serving abroad in our foreign service – would be hit with large surcharges if they decided to drive again and buy insurance in California. For political reasons, you exempted from Prop 33’s large rate increases a small segment of those who stop driving for legitimate reasons, active duty military officers. That certainly does not mean you are helping soldiers keep a discount. Moreover, foreign service officers, families of military officers, disabled veterans and others who stop driving for good reason, but cannot prove active duty military service is the reason for their coverage lapse, would get slammed under Prop 33 with big rate hikes.”

This month, Joseph also gave $195,000 to a nonprofit organization for its support of Proposition 33 in another attempt to mislead voters about the impact of Prop 33 and camouflage its insurance industry backing. Joseph gave 99%, $8.4 million, of the funds in support of Prop 33.

The measure would overturn a 24-year-old law banning discriminatory practices by auto insurance companies that were brought to light in a 1987 California civil rights case, King v. Meese. Proposition 103, passed by the voters in 1988, banned auto insurers from charging more, or refusing to sell insurance, to people who were not previously insured.

Read more about Proposition 33 at www.StopProp33.org

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September 13, 2012

Mr. Joseph,

Out of respect for military officers and foreign service employees, who face life-threatening circumstances at our embassies abroad, we call upon you to immediately withdraw your deceptive and disrespectful radio advertising campaign in favor of Proposition 33.

You began your disingenuous “Heroes” radio advertising campaign for Proposition 33, the California ballot measure for which you have given 99% of the funding, the day after September 11th with the hope of fanning patriotic sentiments for your insurance company’s cause. You could not have known that those cynical advertisements – which misrepresent your measure’s impact on our nation’s military, their families and foreign service officers – would air when American military and foreign service members are under grave threat worldwide.

Nonetheless, you now have an obligation not to betray the seriousness of the current circumstances our heroes face abroad with radio advertisements that lie about what Prop 33 does in their name.

As the Los Angeles Times editorial staff blog noted Wednesday:

“Proposition 33, an initiative to let auto insurers offer discounts to competitors’ customers, isn’t quite the same as Proposition 17, a similar proposal that voters rejected in 2010. But the campaign in favor of the measure seems to be following the same truth-distorting playbook.

“The Yes on Proposition 33 campaign has bought airtime on 19 radio stations in five cities for what appears to be its first commercial, which is due to begin broadcasting Wednesday. The 30-second spot declares: ‘Proposition 33 protects our veterans and military families, and allows them to keep their discount on car insurance, saving them money.’

“It would do nothing of the kind.”

As you well know, Prop 33 has nothing to do with military officers keeping any discount under current law. All your initiative does is legalize a now-illegal rating factor: Whether a driver has had auto insurance continuously or not.

Your radio advertisement claims Prop 33 is about “supporting our heroes.” But under Prop 33, good drivers who have stopped driving for legitimate reasons – like serving abroad in our foreign service – would be hit with large surcharges if they decided to drive again and buy insurance in California. For political reasons, you exempted from Prop 33’s large rate increases a small segment of those who stop driving for legitimate reasons, active duty military officers. That certainly does not mean you are helping soldiers keep a discount. Moreover, foreign service officers, families of military officers, disabled veterans and others who stop driving for good reason, but cannot prove active duty military service is the reason for their coverage lapse, would get slammed under Prop 33 with big rate hikes.

Mr. Joseph, you have repeatedly cited your experience as a veteran to justify why one insurance company billionaire should be allowed to change the insurance laws through Proposition 33. We urge you to take a moment of silence to think like a veteran now and withdraw these advertisements.

Sincerely,
Jamie Court

You Really Can’t Trust Mercury

2:13 pm in Uncategorized by Consumer Watchdog

The Mercury Insurance initiative’s lawsuit to stop the Attorney General and us opponents from telling the truth about Proposition 33 – how it will raise auto insurance rates – got tossed out of Sacramento Superior Court last Thursday. The Mercury campaign asked the court to rewrite the Official Ballot Pamphlet, which is sent to every voter’s home, so it would contain only Mercury’s false claim that everyone will get “discounts” if Proposition 33 passes. After an hour-long argument, the judge said no.

But the ink was hardly dry on Thursday’s court order when Mercury told yet another lie – this time about what we said in court.

In a press release issued Friday morning, Mercury said: “CONSUMER WATCHDOG ARGUES IN COURT THAT THE TRUTH IS ELASTIC.”

We never said that, of course. (The release also called us “corporate lawyers,” which the corporations we take on would no doubt find bewildering.)

I guess we shouldn’t be surprised that George Joseph, the multi-billionaire Chairman of Mercury Insurance who has contributed 99.1% of the $8.29 million received by Proposition 33, can’t stop lying about his proposition and the consumer, citizen, senior and patient’s organizations who vehemently oppose it. After all, according to the California Department of Insurance:

“Mercury [has a] lengthy history of serious misconduct, and its attitude – contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court….Among Department staff, consumer attorneys, and consumer victims of its bad faith, Mercury has a deserved reputation for abusing its customers and intentionally violating the law with arrogance and indifference….”

Mercury’s dirty propaganda campaign didn’t work back in 2010, when the company mounted a nearly identical proposition to deregulate auto insurance, also sued the Attorney General and us, spent $16 million, and still lost. Joseph and the pigs at the Mercury trough (an assortment of PR hacks, phony non-profit groups, insurance agents and bought-and-paid-for politicians) think the voters are stupid. But they are wrong. California voters can smell a dirty, self-serving initiative a mile away.

The Mercury Insurance campaign might have gotten away with its Friday fabrication, except we were able to catch them red-handed.

Hours before Thursday’s hearing, I found out that Joseph’s lawyers had not requested a court reporter be there to take down everything that was said in court. (Thanks to severe budget cuts, state courts can no longer afford to pay for court reporters – the parties in a lawsuit have to pay.) It seemed odd that this mega-billionaire would not spring for someone to record the truth… and then I realized that the Mercury campaign might not want a transcript of what happened in court, so they could lie about it later.

So I pulled out my checkbook, went to a special window at the Sacramento Superior Court, and paid the $30 for the court reporter myself.

Good thing, as it turns out.

The court reporter’s transcript confirms that our lawyer, the highly respected James Harrison of Remcho, Johansen & Purcell, never uttered what Mercury quoted him as saying. Rather, citing the First Amendment and many legal decisions, he urged the court to reject Mercury’s attack on our conclusion that Proposition 33 will “deregulate” auto insurance premiums. Here are his words:

“Your Honor, as the Court noted, deregulation is an elastic and ideological concept. In the Huntington Beach case, for example, the Court refused to make a change to the argument that the measure requires AES, the electricity company, to pay its fair share. And the reason that the Court refused to intervene was that the term ‘fair share’ is a very elastic and ideological concept. What you understand to be a fair share might not be what I understand. The same is true of deregulation, your Honor. What I understand to be deregulation may have a very different meaning to someone else. It’s a very elastic concept.”

Mercury’s legal shenanigans wasted a lot of taxpayer money at a time when California courts are struggling to deliver justice fairly and efficiently despite a gaping hole that the Legislature has inflicted on the judicial branch budget. (Late Friday, Joseph’s lawyers filed an appeal, hoping to overturn the Superior Court’s decision. It was summarily denied.)

Forcing the Attorney General to defend in court her summary of Proposition 33, which she is required by law to prepare for the ballot, was also an unnecessary drain on that law enforcement agency’s scarce resources. (Joseph was also furthering a strategy recently adopted by Wall Street and other corporate interests: Attacking Attorney General Kamala Harris in an attempt to intimidate and undermine her.)

The Mercury campaign’s public relations minions don’t care about the cost to taxpayers. To them, filing a lawsuit in court is just another gambit in their greed-driven, deceptive campaign to get the voters to pass a law allowing companies like Mercury Insurance to raise your auto insurance rates and make more money.
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Posted by Harvey Rosenfield, Founder of Consumer Watchdog and Author of California Proposition 103, California’s landmark Auto Insurance Regulation law.

Insurance Billionaire-Sponsored Prop 33 Will Raise Premiums On Millions of Responsible Drivers

3:54 pm in Uncategorized by Consumer Watchdog

Mercury Insurance Warning

Consumer Advocates Say Prop 33 Means Auto Insurance Rate Hikes of 33% or More

The newly numbered Proposition 33, funded by Mercury Insurance’s billionaire Chairman George Joseph, is a replay of Mercury’s unsuccessful 2010 initiative aimed at raising auto insurance premiums on millions of Californians.

According to the Attorney General’s official title of the initiative, Prop 33: “Changes Law to Allow Auto Insurance Companies to Set Prices Based on a Driver’s History of Insurance Coverage.” The Attorney General’s summary explains that Prop 33 “Will allow insurance companies to increase cost of insurance to drivers who have not maintained continuous coverage.”

Prop 33 aims to change over 20 years of insurance law by repealing a key anti-discrimination provision from the 1988 voter initiative Proposition 103. In addition to broadly reforming insurance rates in California, Proposition 103 specifically prohibited an insurance industry redlining scheme first brought to public attention by the 1985 California civil rights case King v. Meese. While Prop 103 made that scheme illegal 24 years ago, Prop 33 would rollback that protection and revive this discriminatory practice by insurance companies that particularly targets low-income and other Californians struggling financially.

Consumer advocates opposing Prop 33, including Consumers Union, Consumer Federation of California and Consumer Watchdog, say that Prop 33 is another deceptive insurance company trick to raise auto insurance rates for millions of responsible drivers in California. While the insurance industry backers of Prop 33 promise that it will give people discounts, the measure is actually designed to get around an existing law that prevents unfair surcharges on good drivers.

Prop 33 allows insurance companies to charge dramatically higher rates to customers with perfect driving records, just because they had not purchased auto insurance at some point during the past five years. Drivers must pay this unfair penalty even if they did not own a car or need insurance at the time.

“The insurance companies are at it again with another deceptive initiative that says one thing but does another,” said consumer advocate Douglas Heller with Consumer Watchdog Campaign. “When an insurance billionaire spends millions of dollars on a ballot measure, hold onto your wallet. Prop 33 is the newest edition of Mercury’s long-running effort to give insurance companies a new way to unfairly raise auto insurance premiums.”

Mercury Insurance Chairman George Joseph has already spent eight million dollars on Prop 33 and will likely spend more than the $16 million spent by Mercury for its 2010 initiative, according to consumer advocates. Prior to his serial attacks on consumer rights at the ballot box, Joseph and his company pushed for legislative repeal of the consumer protection laws, but that change was ruled illegal by the California Court of Appeal.

About ten years ago, Mercury was caught illegally surcharging many of its customers using the same so-called “continuous coverage” scheme proposed in Prop 33. At the time, Mercury added a 40% surcharge on drivers with perfect records who did not have prior insurance coverage at some point in the past, even if they did not need coverage. In other states where Mercury is allowed to add the Prop 33 surcharge, rates jump by 50% to 100% and sometimes more.

“Wherever Mercury has imposed the financial penalty that would be allowed under Prop 33, premiums for many drivers skyrocket,” said Heller. “When California voters go to the polls in the November, they should ignore the insurance industry’s slick ad campaigns and simply remember that Prop 33 will raise auto insurance rates by 33% or more.”

Prop 33 would increase premiums for Californians who stopped driving for legitimate reasons, including:

  • graduating students entering the workforce;
  • people who dropped their coverage while recuperating from a serious illness or injury that kept them off the road
  • Californians who previously used mass-transit; and
  • the long-term unemployed.

Californians who had chosen not to drive for a time and did not need insurance would be surcharged when a new job, move or some other circumstance requires them to buy insurance again. Prop 33′s unfair penalty would punish drivers with premium surcharges that could reach $1,000 a year or more just because they took a hiatus from driving their automobile.

For more information about Prop 33, Consumer Watchdog Campaign has created: www.StopTheSurcharge.org

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Mandatory Health Insurance Needs Rate Regulation As Next Step To Make Coverage Affordable

2:28 pm in Uncategorized by Consumer Watchdog

Decision Upholds Key Protections Requiring Insurance Companies To Sell and Price Insurance Regardless of Health Status

Supreme Court after HCR decision

Today’s decision by the United States Supreme Court to uphold the Affordable Care Act and its mandate that individuals purchase health insurance makes rate regulation the next essential phase of health reform, said Consumer Watchdog today.

Consumer Watchdog praised the court for requiring health insurance companies to sell to people regardless of pre-existing conditions, eliminating medical underwriting, and barring practices like rescission that made health insurance disappear when patients needed it most. These reforms will expand Americans’ access to health insurance and help policyholders get the coverage they are promised, said Consumer Watchdog.

“Upholding the individual mandate makes rate regulation the next essential phase of health reform and we hope the President will join in helping us to keep premiums low now that people are going to be taxed for not having health insurance,” said Jamie Court, president of Consumer Watchdog. “We must ensure health insurance premiums are affordable if Americans are going to have to buy it. The future of health care reform depends on regulating premiums and making health insurance more transparent and accountable.”

Consumer Watchdog’s campaign affiliate, Consumer Watchdog Campaign, is sponsoring a ballot initiative to force health insurance companies to justify rate increases and get approval before they take effect. The ballot initiative is awaiting certification for the ballot. More on the ballot measure at: http://www.JustifyRates.org.

A Consumer Watchdog report finds that strong rate regulation is necessary to hold down costs and keep insurance affordable under health reform. The report examined Massachusetts where rate regulation has begun to successfully hold down premiums after the state’s individual mandate, which was the model for federal reform, failed to control costs.

Download the report “Health Reform and Insurance Regulation: Can’t Have One Without The Other”

The Insurance Industry Loves Its Secrets

12:51 pm in Uncategorized by Consumer Watchdog

Just when consumers are finally getting a look at how health insurance companies conduct their business, the industry is racing to shut and lock the door. Buried deep in a “model law” for states to update health insurance regulation is a clause that would keep secret the companies’ justification for exorbitant rate increases.

A stethoscope listening to a piggy bank.

Photo: 401k 2012 / Flickr.

Why’s this so bad? Because one of the few ways patients and consumer groups can tell whether a rate increase is justified is to closely examine the data-heavy actuarial reports that insurers use as their defense. In states with consumer-friendly insurance commissioners, some have found gross math errors in favor of the companies. (Simple mistakes? Maybe.) Without access to actuarial and other related data, consumers can’t even hold an unfriendly insurance regulator to account, much less force the company to back down.

The “model law” is being drafted by the National Association of Insurance Commissioners, a private body of state insurance commissioners. It has long been criticized for being too cozy with the industry. The NAIC, however, has also drafted a lot of the regulations governing health insurance reform nationally, with the explicit approval of the Department of Health and Human Services. So what the NAIC says and does matters to every insurance policyholder.

Here’s the industry-friendly secrecy clause tucked into the NAIC’s model law, which most states would closely follow in drafting their own laws:

Each health carrier shall file with the commissioner annually on or before March 15, an actuarial certification certifying that the carrier is in compliance with this Act and that the rating methods of the carrier are actuarially sound. The certification shall be in a form and manner, and shall contain such information, as specified by the commissioner. A copy of the certification shall be retained by the carrier at its principal place of business.

(3) (a) A health carrier shall make the information and documentation described in paragraph (1) available to the commissioner upon request.

(b) Except in cases of violations of this Act, the information shall be considered proprietary and trade secret information and shall not be subject to disclosure by the commissioner to persons outside of the Department of Insurance except as agreed to by the health carrier or as ordered by a court of competent jurisdiction.

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