Consumer Watchdog: 'You Can't Trust Mercury Insurance'

Mercury Insurance Blocks Billboard Warning Consumers About the Company

Consumer Group Releases Smoking Gun Documents, in Wake of Fires Warns
Homeowners Insured by Mercury to Take Special Care

SANTA MONICA, Calif., Sept. 3 /PRNewswire-USNewswire/ -- Mercury Insurance,
whose conduct led Consumer Watchdog to erect a billboard last week warning
consumers "you can't trust Mercury Insurance," is threatening to sue the
billboard company, CBS Outdoors, unless the billboard is taken down, the
company has informed Consumer Watchdog. Representatives of CBS Outdoors have
told Consumer Watchdog the billboard will be taken down immediately.

The group posted the billboard to expose serious problems with Mercury
insurance, which is California's third largest auto insurer and ninth largest
home insurer. The company has a long history of mistreating its customers and
attacking consumer protection laws, the nonprofit Consumer Watchdog said at a
news conference today.

With wildfires raging, Consumer Watchdog pointed to a fine by the Florida
Insurance Commissioner in the wake of Mercury's handling of hurricane claims
to warn California homeowners insured with Mercury to take special care in
documenting their property in case they need to file a claim. The Florida
Commissioner's 2006 news release explained:

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. . .
[Florida Office of Insurance Regulation, May 8, 2006]

Last year, the California Department of Insurance assessed a $250,000 fine
against Mercury for violations of state laws concerning claims handling
practices.

"Mercury is trying to block a public debate over its claims handling
practices, its violations of state insurance laws and its continuous assault
on consumer rights," said consumer advocate Harvey Rosenfield, who is the
founder of Consumer Watchdog and author of California's landmark insurance
regulation law, Proposition 103. "People who have Mercury Insurance, or may be
tempted to purchase coverage from Mercury Insurance, are entitled to know the
facts about the company's conduct."

Consumer Watchdog's public education effort about the company's practices
began with a billboard on Wilshire Boulevard, about a half mile east of
Mercury's corporate headquarters. The sign reads: "Consumer Watchdog Says:
'You Can't Trust Mercury Insurance.'" The group has published the "Top Ten
Reasons You Can't Trust Mercury Insurance" on its ConsumerWatchdog.org website
as well as a series of documents exposing company practices.

The California Insurance Department has frequently investigated complaints
about Mercury. A recent legal brief by state regulators seeking penalties
against the company stated:

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.
[Department's Opposition to Respondents' Motion In Limine, February 20, 2009
OAH Case No. 2006040185]

In that same brief, the Department of Insurance also cites a confidential
"examination" of Mercury by the agency that the company is trying to keep from
public disclosure. The law allows the Insurance Commissioner to release the
examination. Consumer Watchdog has reviewed the document and is urging that it
be made available to the public.

Consumer Watchdog has also reviewed portions of a "claims handling manual"
that instructed the company's adjusters on how to lowball customers ("Never
use your top dollar to begin negotiations") and delay payments ("Use time as
your ally").

Another document released by Consumer Watchdog today is Mercury's agreement
with collision repair shops. It shows that Mercury pays financial incentives
to body shops that use "aftermarket" and "reconditioned" parts when repairing
vehicles. Under the terms of the agreement, Mercury pays a 20% mark-up when
shops use aftermarket parts, up to $750, and penalizes shops that use original
manufacturer parts by paying 5% less than the body shop paid for those parts.

"If you have an insurance policy with Mercury Insurance, you need to know that
Mercury has engaged in practices over the years that make it harder to get
your claim paid and even if you do there is a good chance that you'll be stuck
with inferior replacement parts," said Consumer Watchdog's Executive Director
Douglas Heller. "Mercury advertises low rates, but insurance customers need to
know that whatever you pay for insurance is too much if you can't trust the
company to be there for you when you have fire damage or a car accident."

A History of Political Attacks on California Consumer Protections

In addition to mistreating policyholders, Mercury has been the most aggressive
insurer in California when it comes to attacking California's consumer
protection laws, according to Consumer Watchdog. The company has sponsored at
least eight bills attempting to dismantle the 1988 voter initiative
Proposition 103, which mandated stringent regulations of insurance company
rates and practices, and has saved California motorists $62 billion. The only
bill that became law - SB 841 (Perata) from 2003 - was deemed an illegal
amendment to Proposition 103 and declared invalid by a California court.

Mercury has also filed ballot initiatives aimed at Proposition 103's
protections. In 2006, Mercury proposed, then later withdrew, a measure that
would have allowed auto insurers to return to the practice of basing premiums
primarily on a motorist's ZIP Code rather than driving safety record.

This summer Mercury announced it was sponsoring a June 2010 measure. The fine
print of Mercury's initiative would allow insurers to charge drivers higher
rates if they ever file a claim, even when they are not at fault, or if they
had a lapse in insurance coverage during the past five years and later
restarted coverage, or tried to purchase insurance for the first time - all of
which are illegal under current law. A new version of that initiative was
announced late yesterday by the company.

Political Contributions and FBI Transcripts

A third reason why Consumer Watchdog believes that Californians can't trust
Mercury Insurance is its aggressive political contribution practices. Mercury
has given more money to California politicians and parties between 1999 and
2008 ($2,746,600) than the other four largest auto insurers combined
($2,266,750) - State Farm, Farmers, Allstate and Auto Club - according to data
collected from the Secretary of State's office. According to Consumer
Watchdog, Mercury's prolific campaign funding is a key element in the
insurer's effort to avoid accountability for its bad practices.

In 2000, Mercury paid $50,000 to then-Insurance Commissioner Chuck
Quackenbush's campaign committee at about the same time that the Department of
Insurance dropped an investigation into Mercury's practice of allowing its
agents to charge customers illegal fees.

Consumer Watchdog says that Californians should not be surprised to learn that
Mercury and its founder, billionaire George Joseph, were the subject of
inquiries during two FBI corruption investigations in the State Capitol over
the last twenty years. Consumer Watchdog has released part of one transcript
from 1991, in which a lobbyist and State Senator (both of whom went to prison)
discuss the possibility that Joseph, who needed "help" on legislation, would
make a substantial financial contribution to the Senator. That transcript is
at ConsumerWatchdog.org and more transcripts will be released in the future.

The "Top Ten Reasons You Can't Trust Mercury Insurance," along with much more
information, is available at:
http://www.consumerwatchdog.org/insurance/donttrustmercury/

Consumer Watchdog, formerly The Foundation for Taxpayer and Consumer Rights,
is a nonpartisan, nonprofit organization.

SOURCE Consumer Watchdog

Doug Heller of Consumer Watchdog, +1-310-392-0522, ext. 309