Insurer trying to pass measure previously defeated last June

by Brian Leubitz

I’m not sure what Mercury Insurance Chairman George Joseph thinks will be more in his favor come next November, but he’s looking to qualify a measure stunningly similar to last year’s loser, Prop 17. Today Joseph was revealed as having donated over $8mil towards qualifying Prop 17’s virtual clone.

The current proposal, like Proposition 17, would repeal Proposition 103’s ban on considering a driver’s insurance coverage history when setting rates and premiums.  It would allow insurers to surcharge customers who had not purchased auto insurance at some point during the past five years, whether or not they had been driving.  Consumer Watchdog estimates that those surcharges would increase premiums by as much as 40% or more for millions of Californians including students who went away for college, Californians who previously used mass-transit, and the long-term unemployed.
 


It was a bad idea in 2010, and it is a bad idea in 2012.  While June 2012 might seem an inviting target for ambitious corporatisits, that is a risky gambit considering the legislation on the Governor’s desk that would restore all future signature driven measures to the general election ballot. November 2012 will not really be the opportunity to pass already-rejected crap, but it looks like Mercury Insurance will take that bet.

Because, they want to save you money, don’t you know?!?

by Consumer Watchdog

Tennis fans were riled by our drive-by and fly-by mobile advertisements at the finals of Mercury Insurance Open in Carlsbad yesterday. Our message: “Don’t Trust Mercury Insurance.” You can watch a short video here, which explains why students are getting involved against Mercury.

Tennis fans were riled by our drive-by and fly-by mobile advertisements at the finals of Mercury Insurance Open in Carlsbad yesterday. Our message: “Don’t Trust Mercury Insurance.” You can watch a short video here, which explains why students are getting involved against Mercury.

Here’s some of the reaction:

“The incessant noise from the plane you hired to hawk your message ruined the once a year final for many of us,” commented JZ on our web page.

Tweets:

“Consumer Watchdog says don’t trust Mercury’ banner tow flying over Mercury Insurance Open. #wow #ScrambleTheJets”

“They fly a plane overhead w/ sign: “Consumer watchdog says Do Not Trust Mercury” at the Mercury Insurance Group open… Ouch!! #WellPlayed”

“Sports not politics!” a fan shouted at our local protestors, who were handing out t-shirts that say “Don’t Trust Mercury Insurance.”

Our watchdogs were protesting because Mercury is at it again. The insurance company – rated one of the worst – has filed another deceptive ballot measure to raise rates on policyholders, which is nearly identical to Proposition 17, that voters rejected last June.

Did shareholders and investors at the Mercury Insurance Open get the message?

You can encourage Mercury not to waste tens of millions of dollars more trying to deceive Californians again by posting this “Don’t Trust Mercury Insurance” link on your Facebook or Twitter feeds.

We’ll send the first 100 people who do a t-shirt (Just email us with the link and your mailing address at [email protected])

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Posted by Jamie Court, author of The Progressive’s Guide to Raising Hell and President 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.

Facing a surge of voter opposition in the last few days of its campaign for Proposition 17, sponsor Mercury Insurance has injected another $1 million dollars into its campaign to fund last-minute mailings and advertising that conceal the insurer’s support and feature a fraudulent “Consumer Coalition of California.” View the mailer here. To date, Mercury has donated $16 million to fund the Prop 17 campaign. Prop 17 would penalize Californians who opt to stop driving for a time, for virtually any reason. Voters would be required to pay up to a $1,000 more dollars a year for auto insurance when they sought to restart coverage.

The so-called “Consumer Coalition of California” whose name appears on the Prop 17 mailer is run by a Texas woman, Virginia Jarrow, who has repeatedly sided with industry. All legitimate consumer groups in California, including, Consumers Union, Consumer Watchdog and Consumer Federation of California oppose Proposition 17. The Mercury funded mailers also fail to identify Mercury as an insurance company in state mandated disclosures. The disclosure on the mailers state: “Paid for by Yes On 17-Californians For Fair Auto Insurance Rates And Mercury General Corporation And Affiliates.” Mercury Insurance’s corporate parent, Mercury General Corporation, doesn’t have “insurance” in its name. Basically, this is consumer fraud and it’s outrageous.

Turns out Jarrow is not alone. Mercury Insurance has been paying other front groups for their “support.” Californians for Fair Auto Insurance Rates (Cal-FAIR) Mercury Insurance has paid hundreds of thousands of dollars to Bicker, Castillo & Fairbanks, a public relations firm, to create a front group called Californians for Fair Auto Insurance Rates or CAL-FAIR. The chief spokesperson for CAL-FAIR, Kathy Fairbanks, is a communications consultant and partner in the firm that runs campaigns for several different corporations and interest groups. Consumers First, Inc. Jim Conran is listed as the co-chair for Californians for Fair Auto Insurance Rates (Cal-FAIR)/Yes on 17 campaign. As head of something he calls Consumers First, Inc. (which doesn’t appear to be incorporated or have a website), Conran has been paid tens of thousands of dollars by the Prop 17 campaign to help Mercury Insurance try to deceive voters on the measure. Prop 17 is not his only deception. Mr. Conran is a pay-for-play PR professional who is paid by industry executives to run several front group projects. Kirk West Kirk West, a co-chair of CAL-FAIR, has already made over $30,000 as a paid spokesman for Mercury Insurance’s campaign on Prop 17. He was formerly the President of the Chamber of Commerce and is now a gun-for-hire for industry executives. Hopefully, voters will read the editorial boards that oppose Prop 17, or the Stop Prop 17 ad, or take a look at the site: http://www.StopProp17.org and vote no on Prop 17!

This basic theme is really elemental, and puts the lie to Mercury Insurance’s claims that they are trying to save consumers money.  Here’s the situation, stated as simply as possible.

Now, why exactly would somebody believe this? That they are spending $3.5 million to save their customers money?

In actuality, they want to be able to force people to keep up insurance while they are away from their cars.  Soldier who is out of the country on deployment? Better keep that insurance or you will face jacked up rates when you come home. Move into the city and don’t need a car? Better keep that insurance or you will face jacked up rates in case you change to a job that requires a car commute.

Enjoy the video and pass it around. Once people see the logic they are trying to sell, they’ll swat this away.

This Wednesday morning, two legislative committees will hold a joint hearing on Proposition 17, funded by Mercury Insurance. But it looks like Mercury's Chairman George Joseph is not going to bother showing up for it.

The founder of Consumer Watchdog, Harvey Rosenfield, has challenged Joseph to attend the hearing in Sacramento to publicly defend his ballot initiative. Prop 17, which would allow insurance companies to raise premiums on drivers based on their history of buying auto insurance, is 99% funded by Mercury and a particular focus of Joseph’s decades long effort to evade accountability to consumers

Joseph has already spent $3.5 million on Prop 17 to advance his greedy cause. So what's up George, why won't you put your mouth where your money is?

Harvey Rosenfield wrote to Joseph late last week urging him to stop hiding behind his public relations flacks, front groups and radio ads and attend the hearing of the California Assembly Insurance Committee and Senate Banking, Finance and Insurance Committee to explain why voters in California should trust Mercury Insurance and its quest to enact Prop 17. In his letter to Joseph, Rosenfield points out that the insurance executive has privately defended his initiative in recent calls to several people who have spoken out against Prop 17. Now Joseph has an obligation to come forward and publicly defend this culmination of a decade-long attack on state consumer protections. Rosenfield writes:

The time has come for you to stop hiding behind your paid surrogates and defend your Captain Ahab-like quest to surcharge and discriminate against motorists before the public…This is not like one of those legislative hearings where you can do your dirty work through lobbyists and donations to the politicians. Will you be there to defend publicly what you are saying privately, or will it be another one of your flunkies who does your bidding?  I’ll be waiting to see if you have the courage to face me and our publicly elected officials. If you don’t, sir, you have no business sponsoring a ballot measure in this state.

In the letter, Rosenfield notes state agency reports on Mercury’s history of discrimination, fines by state regulators and that Mercury ranks at the bottom of the most recent JD Power customer satisfaction survey: 27th of 32 large auto insurers.

Proposition 17 would create an insurance surcharge on drivers, including soldiers and seniors, who have had a lapse in car insurance coverage for virtually any reason during the past five years, or who missed a payment. Under the measure, people who stopped driving and didn’t need insurance for a time would be required to pay up to a $1000 more for car insurance when they sought to restart coverage. Currently, insurance companies are prohibited from imposing the surcharge in California. The initiative is opposed by consumer and citizen groups including Consumers Union, Consumer Watchdog, Consumer Federation of California, California Alliance of Retired Americans and VoteVets.org.

We were wondering if Joseph was going to step up after reading the letter, so earlier today I called Coby King, who serves  as Mercury's communications director, to ask if Joseph would be flying to Sacramento – but alas, no response

More information at StopProp17.org.

The courts resolved a slew of disputes about the initiatives over the last few days.  As we mentioned recently, Prop 14, the “open primary” measure that would result in a lot more Dem-on-Dem fights, was the subject of much legal wrangling.

In the end, Prop 14 will largely stay the same:

Gov. Arnold Schwarzenegger and other supporters said they beat back an effort by union officials and lawmakers to undermine the proposal that would allow Californians to vote in state primaries regardless of candidates’ or voters’ party affiliations.

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The governor and state Sen. Abel Maldonado (R-Santa Maria) intervened to stave off the changes. Superior Court Judge Allen Sumner ruled Friday that voters should see the measure very much as it was originally written. Sumner made minor changes to the wording regarding potential costs related to an open primary and made clear that voters would not have to state a party preference. (LA Times)

Meh, the language that was passed during the budget fight was passed at Maldonado and Arnold’s gunpoint. It should have been changed, but them’s the breaks. It means that more resources will need to be spent to beat this stinker.  As of right now, it looks like both major parties will officially oppose the measure.

On Prop 17, Mercury Insurance’s hidden agendas scheme against Prop 103, the court ruled that ballot arguments will stand:

Judge Allen Sumner has upheld Attorney General Jerry Brown’s Official Title and Summary of Proposition 17, which warns the measure will allow car insurers to raise premiums.  The ruling means voters will learn in the ballot pamphlet that Prop 17 will allow insurance companies to raise rates on California drivers based on their history of buying auto insurance.

Attorneys for Mercury Insurance failed as it tried to convince the court to remove any reference to the insurance surcharges that Prop 17 will create.  Consumer advocates hailed the decision as a victory for voters, who will have the opportunity to cut through Mercury’s multi-million dollar campaign of lies and read a fair assessment of the insurance company’s initiative in the Voter Guide.

“When voters face the deceptive, multi-million dollar insurance company ad campaign for Prop 17, at least they’ll be able to turn to Attorney General Brown’s summary to learn the truth,” said consumer advocate Harvey Rosenfield who co-authored one of the ballot arguments against Prop 17.  “Now that the Judge has made it clear that Prop 17 lets insurance companies raise car insurance premiums, will the insurance company backers of Prop 17 stop lying about it?” (Press Release)

Now, the ballot arguments aren’t nearly as important as the ballot title and summary, but every little bit helps.

Speaking of the initiatives, if anybody has a point for the Calitics Editorial Board to consider for these things, let us know. We’ll be doing endorsements soon.

This week, Harvey Rosenfield filed a lawsuit in Sacramento Superior Court urging the court to remove false and misleading statements that Mercury Insurance Company has made in its ballot arguments that will appear in the Official Voter Guide for the June ballot.

In the lawsuit, Rosenfield writes:

Mercury Insurance Company is attempting to put one over on the voters of California and this Court. Mercury and its surrogates are entitled to use the space allotted to them in the official Ballot Pamphlet to make the most persuasive case they can in support of the initiative…But the law does not allow Mercury to use the official Ballot Pamphlet to propagate false and misleading statements regarding either the terms of its proposed initiative or the state of existing law. And that is exactly what Mercury has done…

The 202-page lawsuit identifies numerous false and misleading statements made by Mercury's ballot signers.  For example, responding to criticism of Prop 17 by military vets and USAA, an insurance company that serves the armed forces, Mercury claims in its argument that soldiers living stateside are exempted from Prop 17’s surcharges, and that California consumers are currently charged using the “continuous coverage” factor that Prop 17 is promoting. These assertions are false, as explained in a brief summary below.  The lawsuit can be downloaded here

So, while we are trying to get the facts to the voters, the Alliance of Insurance Agents of Brokers Executive Director Mike D'Arelli is trying his best to obfuscate the real goals of Mercury Insurance. In today's Fresno Bee story on Rosenfield's lawsuit, D'Arelli tries his best hand at defense, not by explaining why Mercury is lying to Californians, but, you guessed it, by attacking us.

It’s pretty pathetic when insurance agents actively work against the interests of their customers. Mike D’Arelli is doing a huge disservice to those he represents. We would say we were surprised, but we're talking about a campaign that is sponsored by Mercury Insurance, an under-handed, dishonest and discriminatory company.

But facts are stubborn things, and Mr. D'Arelli can't make Mercury's lies go away by simply not addressing them.

We, on the other hand, are happy to go through Mercury's lies in the ballot argument. Here are some of those misleading claims made by Mercury:

>  Impact on the military. Prop 17’s surcharge for drivers who have not had five years of continuous insurance coverage has a limited exception for only those soldiers who are “absen[t] from the United States while in military service.”  Soldiers serving the country on base in the states are not exempt, even though they might not need to have and pay for automobile insurance while on base.  Nonetheless, the Rebuttal Argument falsely claims that the ballot measure exempts soldiers who “cancel insurance when serving overseas or in another state” from its surcharges.  When Mercury sponsored SB 841 in 2003 to allow the same surcharge against California motorists, it included an exemption for soldiers serving in other states. But Prop 17 has no such protection for stateside soldiers.

> Current law. Prop 17 creates a new rating factor in order to circumvent the consumer protections of current law and surcharge many good drivers in California.  But throughout its ballot arguments, Mercury pretends that the new rating factor it proposes to create, “continuous coverage,” already exists under current law. The Argument in Favor of 17 states: “Under current law, drivers who have maintained auto insurance with the same company are eligible for a continuous coverage discount.” This is untrue. The language of Proposition 17 itself states that it creates a new rating factor “in addition to” and “[n]otwithstanding” current law. Mercury is falsely equating discounts for motorists who remain with the same company for a period of years, which are permitted under Proposition 103, with a new rating factor the company wants to use to base premiums on whether or not people can show they have been continuously insured by any company with no lapses over 90 days over a five year period and have had no missed payments. Mercury has made the same false statements in previous court cases, and the courts have consistently rejected Mercury’s effort to equate the two.

> Surcharges. Mercury's ballot Argument in Favor claims that “Yes on 17 eliminates an existing surcharge for changing companies” and its Rebuttal says that Prop “17 would allow drivers to take your continuous coverage discount with you.” There is no existing surcharge for changing companies, and there is no existing “continuous coverage discount.” Mercury’s claims are false. Prop 17 would create a surcharge on good drivers who have not had five years of continuous auto insurance and would override Proposition 103’s ban on surcharges against the previously uninsured or those who have had a lapse in coverage, even if these motorists are good drivers.

Talk about irony, Mercury Insurance and its front group Ca-FAIR have filed a lawsuit in Sacramento today attacking the ballot argument against Proposition 17 as “false and misleading.” Really? Seems Mercury and Cal-FAIR win top prize in that category. Their endless stream of lies, hyperbole, and distortions boggle the mind. To say it it disingenuous would be generous, to a fault.

The 62-page lawsuit – over our 750 words — filed by Mercury’s campaign committee asks a Sacramento judge to strikeout or rewrite large portions of the arguments against Prop 17, which were wrtten by consumer and veterans advocates as well as former Insurance Commissioner John Garamendi and former Attorney General John Van de Kamp.

Proposition 17, sponsored and funded by Mercury Insurance, would allow insurance companies to surcharge drivers based on their history of purchasing auto insurance. That is currently illegal in California by virtue of the 1988 insurance reform measure Proposition 103. Mercury’s Proposition 17 suit claims that Proposition 103 does not ban consideration of prior insurance coverage history, notwithstanding numerous decisions by CA Dept. of Iinsurance and the courts in the past.

In its lawsuit, Mercury asks the Court to change or delete 10 sections from the 500-word argument against Prop 17 and three sections from the 250-word rebuttal. Mercury, for example, asks the court to strike the sentence from the argument against Prop 17 that reads: “We shouldn't give insurance companies more power to raise our rates, especially during a recession.” The argument against Prop 17 was signed by Consumer Watchdog, Consumers Union, the nonprofit publisher of Consumer Reports and VoteVets.org. Mercury also asks the court to change the rebuttal statement of John Garamendi and John Van De Kamp.

They wrote: “FACT: 17 overturns a law passed by California voters in 1988 to make insurers compete fairly for customers” Mercury has asked the court to change that language to instead read: “FACT: 17 amends a law passed by California voters in 1988 to allow insured individuals to transfer their persistency discounts to other insurers.”

In making these claims to the Court, Mercury and its lawyers distort the meaning of the initiative, current law, and the judicial and regulatory history surrounding the issue.

Harvey Rosenfield, the founder of Consumer Watchdog had this to say when he read the suit:

Mercury Insurance is lying to the Court, just as it has been lying to voters and has lied to regulators, lawmakers and the courts in the past. This lawsuit is a total waste of court resources, but Mercury will spend any amount of money to have its way and deny the public honest information about its attack on responsible drivers who can't afford Prop 17's premium hikes.

Mercury wants to win the surcharge battle, at any price.

For more information about Prop 17, visit: www.StopProp17.org