Mercury Insurance agrees to pay $41 million to end fight with California
Mercury Insurance Co. is ending its two-decade battle with California regulators over extra fees charged to customers by agreeing to pay the state more than $41 million, officials said Wednesday. California Insurance Commissioner Ricardo Lara said it’s the largest property and casualty penalty and interest payment in the state Insurance Department’s history.
In May, a state appeals court reinstated a $27.6-million fine levied against Mercury by the Insurance Department in 2015 for allegedly charging its customers illegal fees.The department said Mercury allowed its auto insurance agents to charge up to $150 in unapproved fees on top of state-approved premiums. That cost consumers more than $27 million in fees on more than 180,000 transactions from 1999 to 2004, the department said, though Mercury argued that the costs were legal broker fees.
Mercury said it “decided to put an end to this 20-year-old-plus dispute in the best interests of its customers, employees and other stakeholders.”Lara said the company advertised that its rates were lower than competing insurance companies’, though they were actually higher because of the fees. That gave agents an incentive to place policies with Mercury even if a competitor’s policy would have been cheaper for the consumer.
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