Stop Prop 17: Mercury Insurance Agent says "If I could not pronounce a name, I should not write that person"

Mercury Agents' Declarations Confirm Government Findings of Discrimination; Company Didn't Want to Insure Diabetics, Middle Eastern Drivers or Women Married to Younger Men: Mercury's "Cougar" Clause

SANTA MONICA, Calif., May 20 /PRNewswire-USNewswire/ -- The following was released today by the Campaign for Consumer Rights:

The campaign against Prop 17 released documents today revealing that Mercury Insurance, the initiative's sole sponsor, required its agents to withhold auto insurance policies from military personnel, diabetics, women married to younger men, and drivers thought to be of Middle Eastern descent even if they had good driving records.

The declarations from three former insurance agents, obtained by Consumer Watchdog, corroborate key findings regarding discriminatory practices at Mercury from a series of California Department of Insurance (CDI) investigations released earlier this year.

"Every week there's a new revelation about how Mercury illegally discriminates against its customers and targets Californians with higher car insurance rates.  Now Mercury wants voters to pass Prop 17 and give insurance companies new power to raise rates," said Doug Heller with the Stop Prop 17 campaign.

Two of the agents were employed by Auto Insurance Specialists (AIS), which was one of the largest Mercury agencies at the time and is now owned by Mercury. A third was employed by another Mercury agency. The insurance agents' declarations were made in the late 1990s at about the same time the California Department of Insurance (CDI) was investigating wide-ranging discrimination by Mercury.  Last month the CDI filed an administrative lawsuit against Mercury for approximately 35 illegal practices as well as for failing to correct the unfair rating practices over the past 15 years despite prior agreements to do so.

According to one of the agents, Michael Feldman:

[Mercury Insurance underwriting managers] Ms. Norris and Ms. Harris directed [AIS Agency branch manager] Mr. Heywood to instruct me that I could not write "poor caliber risks" such as diabetics, salvaged cars or middle easterners for any Mercury insurance policies, including Proposition 103 good driver policies... with regard to middle easterners, they stated that if I could not pronounce a name, I should not write that person.

California law prohibits auto insurance companies from considering the national origin or medical condition of good drivers when deciding whether or not to sell an insurance policy. Under the 1988 insurance reform measure Proposition 103 insurance companies are required to offer their best-priced policy to any customer who qualifies as a good driver.  .

Another former agent, Joseph Falmer, stated:

http://www.consumerwatchdog.org/resources/FeldmanOCRHighlightedComments.pdf

Mercury employees stated to me on numerous occasions that Mercury's "unwritten rules" mandated that Proposition 103 was to be ignored if a Proposition 103 "good driver" fell in to any of the following categories: diabetes, heart condition, physical impairment, born in another country (especially the middle east), hispanic, non-citizen, students (especially those who have not lived in the United States for 10 years), residents of territory 54 (South Central Los Angeles), over the age of 72, military, self-employed and working out of the home…

Former agent Richards Barger, Jr. added on Mercury's "Cougar" Clause:

http://www.consumerwatchdog.org/resources/CougarClause.pdf

There were rules regarding what I call household composition, husband and wife age differences. In other words if a – if the husband was, much younger than the wife, we couldn't entertain the account.

The detailed declaration of Mr. Falmer places the decision to illegally refuse to do business with the targeted segments of the population right at the desk of Mercury's founder George Joseph.  According to Falmer:

[Falmer's superior at the AIS agency] would blame George Joseph, Mercury's founder, saying "Mr. Joseph is really upset with the risks this office has been submitting.  Let's not rock the boat."

The description of illegal discrimination by the agents closely tracks the findings from a series of CDI investigations of Mercury that were revealed earlier this year. The investigations found evidence that Mercury would mark members of the military with a "U" for Unacceptable in certain cases and would subject people with diabetes and heart conditions, as well as unemployed and self-employed Californians, to different standards that made it more difficult or more expensive for those people to get insurance.  Information about the regulatory investigations is available here: http://www.consumerwatchdog.org/insurance/articles/?storyId=33774

The agents' declarations have been submitted by Consumer Watchdog in a government case, in which the CDI is prosecuting Mercury for illegally allowing its AIS agents to charge broker fees to customers.  That practice was identified in the CDI report as one of the many illegal activities of Mercury Insurance.

Another illegal practice the CDI investigation identified was Mercury's system of surcharging drivers who did not have auto insurance at some point in the past.  Such a surcharge is prohibited under Proposition 103, but it would be allowed by Proposition 17 on the June ballot.  

Proposition 17 would allow insurance companies to increase premiums for drivers who had a break in insurance coverage for more than 90 days during the past five years.  It would force good drivers to pay higher premiums even if they weren't driving when they did not have insurance coverage.

For more information, please visit: http://StopProp17.org or find us on twitter at: http://twitter.com/stopmercury and facebook at: http://www.facebook.com/stopprop17

Stop Prop 17 is sponsored by Campaign for Consumer Rights, a nonprofit organization. Campaign for Consumer Rights does not endorse or oppose any candidates for election.

SOURCE Campaign for Consumer Rights