Largest-Ever California P/C Fine Upheld
The California Supreme Court denied a petition for review by Mercury Insurance Company thereby letting stand a $27.6 million fine the Department of Insurance imposed on Mercury for charging illegal fees in violation of Proposition 103. The fine is the largest in the department's history against a property and casualty insurer. Despite being advised for years by the Department of Insurance not to do so, the DOI said Mercury continued to allow its auto insurance agents to charge consumers $50 to $150 in illegal fees on top of the premium the department approved. Proposition 103, passed by the voters in 1988, prevents auto insurers from charging excessive rates and requires that rates be approved by the commissioner.
“This is a victory for consumers that sends a message to insurers that they cannot circumvent Proposition 103’s consumer protection laws in an effort to increase their profits and that the department will stay the course — even if it takes 20 years — to penalize insurers for illegal conduct,” said Insurance Commissioner Ricardo Lara.