By Don Thompson, The Associated Press
Mercury Insurance Co. is ending its two-decade fight with California regulators over extra fees charged to consumers by accepting pay the state more than $41 million, authorities said Wednesday. California Insurance Coverage Commissioner Ricardo Lara said it’s the biggest property and casualty charge and interest payment in the history of the state Insurance Department.
The settlement followed the state Supreme Court last month decreased to hear the company’s appeal from a lower court decision.
The company said it is the fourth biggest private passenger auto insurer in California, with properties over $4 billion. It also offers auto insurance in Arizona, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas and Virginia.
A state appeals court in May reinstated a $27.6 million great issued to Mercury by the Department of Insurance in 2015 for supposedly charging its consumers unlawful fees.
The department said Mercury allowed automobile insurance agents to charge up to $150 in unapproved fees on top of state-approved premiums. That cost customers more than $27 million in fees on more than 180,000 deals from 1999 to 2004, the department said, though Mercury argued that the expenses were legal broker fees.
A judge in Southern California’s Orange County overturned the fine in 2016, however the state’s 4th District Court of Appeal ruled that Mercury agents were not brokers and as an outcome might not charge the fees.
The company defended its actions Wednesday, calling the appeals court decision “a unprecedented and poorly-reasoned viewpoint.” It also said in a declaration that the fees at the heart of the disagreement were collected by independent agents, not Mercury, and had been divulged to consumers.
Mercury included that it “decided to put an end to this 20-year-old plus disagreement in the very best interests of its consumers, workers and other stakeholders.”
Lara said the company advertised that its rates were lower than contending insurer, though they were really greater since of the alleged unlawful fees. That gave agents an incentive to position policies with Mercury, even if a competitor’s policy would have been less expensive for customers.
“Mercury’s unlawful actions misguided customers and undercut rivals, which gave them an unfair advantage in the insurance marketplace,” Lara said in a declaration.
The $41.2 million settlement consists of $8.1 million in interest plus an additional $5.5 million payment to settle a claims of false advertising that had not yet gone to trial, Lara said.
“This was a hard battled legal fight to protect customers … and ensure all insurers play by the rules in California. No insurance company is above the law,” Lara said.
Mercury said the actual great examined to close the case is $500,000 since it currently paid the initial fine of $27.6 million and the rest was for interest and expenses connected with the case.
The majority of the cash will go to California’s basic fund. Almost $5 million will go to reimburse an unique insurance fund utilized to implement state insurance laws, indicating Mercury paid the state’s legal and court expenses, Lara said.Source: ocregister.com