Top 10 Reasons Why You Cannot Trust Mercury Insurance Company I
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For years, Consumer Watchdog has heard from consumers who felt they were mistreated by Los Angles-based Mercury Insurance Company. Our advocates and attorneys have observed Mercury's efforts to cheat consumers and avoid accountability through the Legislature, before state insurance regulators, and in the courts. For these reasons, Consumer Watchdog believes that consumers cannot trust Mercury Insurance. Here are the top 10 reasons why you cannot trust Mercury.
1. Mercury Insurance is described by state insurance regulators as an abusive anti-consumer company.
The California Department of Insurance recently made this statement before an Administrative Law Judge in an agency enforcement action against Mercury:
Mercury's lengthy history of serious misconduct, and its attitude - contempt towards and/or abuse of its customers, the Commissioner, its competition, and the Superior Court - are all relevant to determining the penalty needed to best ensure the protection of the public from future violations and wrongdoing... Among Department [of Insurance] 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.
The statement came in a brief submitted by the Department of Insurance in February 2009 in response to a motion by Mercury to exclude evidence of the company's past conduct. See key pages from that brief here. See, particularly, page 4. Read the "Notice of Noncompliance" in the administrative proceeding filed by the Department of Insurance here.
2. 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 Mercury instructional guide for employees told claims processors how to delay and lowball claims, and to "remind" customers that if they tried to hold Mercury accountable in court for such mistreatment, they could end up losing. Some of the training provided to Mercury claims staff in the manual included:
•"Never use your top dollar to begin negotiations" •"Use time as your ally" •"Remind claimants that a judge or jury would find them at comparative fault"
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. During the lawsuit, a Mercury employee asserted that the company no longer uses the training manual. As the Daily Journal reported on February 29, 2008: Mark Volper and Boris Smorodinski claimed their Sherman Oaks business suffered a slow “death by asphyxiation” while Mercury repeatedly denied their claims and ignored pleading letters for help.
The unanimous decision came last week after jurors were shown internal training guides instructing Mercury adjustors to low-ball customers, drag out their claims and remind them they could be found at fault in a trial. Amerigraphics Inc. v. Mercury Casualty Company BC331524 (L.A. Super. Ct., Feb. 21, 2008).
Read the Daily Journal article about the lawsuit here.
3. Mercury had to be forced by a California court to stop its insurance agents from charging illegal broker fees to unsuspecting customers.
In 2003, the San Francisco Superior Court found that Mercury was deceiving customers through its advertising by suggesting that consumers would pay less for auto insurance from Mercury than from other insurance companies. What its ad campaign failed to disclose was that Mercury customers (unlike the comparison companies) would often be required to pay an additional broker fee that is illegal under California law, driving up the actual price. The court issued an injunction ordering Mercury to change its practices.
Read the judge’s conclusions about how Mercury deceived customers here.
Read the judge’s refusal to lift the injunction against Mercury over this practice here.
4. In 2008, Mercury paid the California Department of Insurance a quarter-million dollar settlement for alleged claims handling violations. People often buy insurance by looking at price. But if a company has a history of failing to handle consumers' claims properly after an accident or a loss -- the moment they need their insurance most -- then a low premium isn't such a great deal. The California Department of Insurance investigated Mercury's claims handling practices, a matter Mercury settled by paying $250,000 (plus the Department's enforcement and legal costs) and agreeing to pay more penalties if they didn't improve their practices in six months. The Department of Insurance explained the problem with Mercury in a June 2008 news release: 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. Read the Department of Insurance news release here.
5. Mercury Insurance was ordered by Florida regulators to pay $2 million to consumers and $1 million to the state for improperly denying legitimate claims and repeatedly flouting the law.
Mercury is not only in the crosshairs of California regulators. In 2006, Mercury was investigated and punished by the Florida Office of Insurance Regulation "after receiving a steady increase in complaints from Florida Mercury policyholders." As the state regulator's news release explains:
The examination found a multitude of violations relating to the companies' business practices including the unwarranted termination of policies upon the filing of a claim, failing to pay the full amount on covered claims, failing to deliver policies within 60 days, failing to provide specific reasons for denial of claims, and the use of unappointed agents. However, it was the use of unfiled forms and rates to improperly deny claims that the Office considered to be the most egregious violation. Read the news story from the insurance publication Best Week: “Florida Orders Mercury General Units to Pay More than $2 Million to Policyholders.”
6. According to a smoking gun document, Mercury pays its repair shops incentives to use aftermarket parts.
Consumer Watchdog has obtained an internal Mercury document that exposes the company's practice of paying its recommended auto repair shops incentives -- up to $750 -- to use aftermarket and reconditioned parts and penalizes its repair shops for using original manufacturer parts. According to the Rate Agreement, Mercury pays body shops 20% more than the shop paid for non-manufacturer parts, while it pays 5% less than the body shop's own cost for original manufacturer's parts. Incentivizing repair shops to use inferior parts when repairing policyholders' cars endangers policyholders even if it may save Mercury money and increase profits. Consumer Watchdog believes that the internal document was issued recently and reflects the current arrangement between Mercury and its body shops.
Read the document here.
7. Mercury Insurance has a long history of trying to thwart consumer protections and the will of the voters in the state legislature.
Ever since California voters enacted the landmark insurance reform initiative Proposition 103 in 1988, Mercury Insurance has led a series of efforts to undermine or repeal its consumer protections.
Over the years Mercury has sponsored at least eight bills in the California Legislature to repeal or override key consumer protections approved by the voters. These include attempts to gut the 20% Good Driver Discount requirement, to re-impose discriminatory ZIP Code-based auto insurance pricing, to add new surcharges on customers, and to prevent courts and the Insurance Commissioner from ordering refunds when insurers violate the law.
Read more about Mercury's efforts in Sacramento to dismantle Prop 103 here.