An inquiry in California alleges that the company violated state laws on how policies are priced and sold, perhaps affecting thousands of customers.
Mercury Insurance Group violated state laws meant to regulate how coverage is priced and sold and, as a result, overcharged perhaps thousands of Californians for homeowner and automobile insurance, the state Department of Insurance said Monday.
The state’s fourth-largest auto insurer failed to ensure drivers were not charged more after accidents in which they were not at fault, and refused to cover bartenders, artists and others unless they met stricter underwriting standards than other customers, a state investigation alleges.
Mercury could face fines of at least $5,000 for each violation under an enforcement action filed Friday, Insurance Commissioner Steve Poizner said. The company continued a number of activities that it had been ordered to stop years earlier, he said.
“Mercury Insurance has disregarded California’s consumer protection statutes and overcharged consumers,” Poizner said. “In addition, the department’s examination finds that Mercury Insurance has apparently continued to violate the law despite agreements with the state to terminate its illegal behavior.”
Mercury spokesman Coby King said the company had not overcharged customers or violated the law. He said the practice of restricting customers in certain occupations, such as artists and bartenders, was ended more than 10 years ago. In a statement, King intimated that Poizner released the report to further his campaign for the Republican gubernatorial nomination.
“This report appears to have been leaked to reporters in a manner designed to further the political interests of the commissioner, not the people of California,” the statement said.
Darrel Ng, a department spokesman, denied any political motives for the department’s action.
“The Department of Insurance takes very seriously its role in ensuring that insurance companies follow the law,” Ng said. “Mercury should spend less time imagining conspiracy theories against them and more time following California’s consumer protection statutes.”
