One of the sections of the California Insurance Code states that rates shall not be excessive, inadequate or unfairly discriminatory. With this in mind, isn't it then unlawful to charge those with continuous coverage more than their historic loss costs warrant? A corollary question - isn't it unlawful to charge those without continuous coverage less than their historic loss costs warrant?
Considering George Joseph/Mercury Insuance discriminatory practices you brought up the wrong question:
History of discrimination cited against Mercury Insurance
Mercury Insurance Corp. has a history of discriminatory practices against an array of groups, including military personnel, that led to unfair surcharges or outright denial of coverage, according to a 275-page report released by the Department of Insurance.
The document, which is being used as part of an administrative case the department is building against the company, was touted Monday by a leading consumer advocate as proof that Mercury intends to "legalize what is now illegal," with Proposition 17, the ballot measure underfunded largely by Mercury.
"The breadth of Mercury's discrimination against people is really astonishing to me," said Harvey Rosenfield, founder of Consumer Watchdog and author of Proposition 103, the 1988 voter-approved law that governs insurance rates. "Here you have an insurance company that broke the law (that is now) using the people's initiative power to pass a measure that would penalize people just because they didn't have coverage or had a lapse in coverage."
Specifically, the internal Department of Insurance report found that Mercury refused to cover, or make policies available to, military personnel.
"When an American insurance company is unjustly and perhaps illegally targeting men and women who are willing to shed blood for our country, we believe the Joint Chiefs of Staff should investigate the matter and take official action to stop further discrimination by the company against American troops," the letter said.
In cases dating back to the 1990s through 2004, the Department of Insurance cites numerous instances in which Mercury overcharged, canceled, refused to sell insurance or made insurance more difficult to buy. Customers who were in the military, were unmarried adults living together, had jobs in the entertainment industry, were artists, longshoreman, "domestics" and other "unacceptable" occupations, were refused coverage, the report said.
In many of the cases, Mercury claimed to have corrected the problems, but follow-ups showed they hadn't, according to the department's report.
The company charged penalties or surcharges to drivers who had prior accidents that were not the driver's fault, for traffic violations when the customer was not convicted or who had no prior insurance coverage or who had lapses in coverage.
Mercury required that some diabetics, cardiovascular patients and people who "suffered from some other medical condition" would be denied coverage unless they provided Mercury with a medical examination report.
People who worked out of their homes, had one source of income, or were self-employed and working out of their homes would face hurdles in obtaining coverage.
Mercury also refused to provide immediate coverage to people who were unemployed. Underwriters for Mercury were encouraged with incentives to deviate from company rules to reject certain applications. And Mercury overcharged policyholders by denying them discounts they were entitled to, the report said.
While you'd like to portray Prop 17 being all about a company you revile, many see it more simply as a correction of the pricing contradictions existing in the California Insurance Code (CIC). The code (in particular 1861.05 (a)) calls for the rates not being excessive, inadequate or unfairly discriminatory, while current administration of the code perpetuates this outcome by making continuous policyholders pay more when switching to a new company. Per the CIC, making a class pay a rate higher than its historic experience is unlawful, as is making a class pay a rate lower than its historic experience.
If you've got compelling legal data refuting this particular point, let's hear it.