Mercury Insurance Files Supreme Court Petition Against California Insurance Commissioner

SACRAMENTO, Calif., Oct. 20 -- The California Department of Insurance issued the following news release:

Mercury Insurance Company and a coalition of insurance industry groups filed a petition against Insurance Commissioner Dave Jones in the U.S. Supreme Court on Tuesday, again challenging his authority to protect California consumers from excessive and unfair insurance rates.

"Consumers should be angry but not surprised that Mercury and other insurers are continuing their attempts to unravel the long-standing consumer protections against unfair and excessive rates established by Proposition 103," said Insurance Commissioner Dave Jones."We have vigorously fought every attempt to reverse those consumer protections and I will continue to do so."

Since California voters passed Proposition103, nearly 30 years ago, Mercury and other insurers have filed lawsuit after lawsuit in unsuccessful attempts to weaken or eliminate the protections provided under the law and limit the commissioner's authority. In its petition to the U.S. Supreme Court, Mercury appears to have dropped its effort to charge consumers for its brand and image advertising.

Instead, Mercury incorrectly asserts it has a constitutional right to a guaranteed profit on each of its insurance products at the expense of consumers.

"No private company has a constitutional right to a guaranteed profit," Jones added. "My role as insurance commissioner is to ensure that insurance rates are not excessive to consumers or inadequate to cover the cost of insurance. Mercury's rates were excessive."

Mercury's current assault on consumer protection comes after their failed request for review by the California Supreme Court in May of an appellate court's decision, which upheld the commissioner's broad authority to protect consumers from excessive rates under Proposition 103.

In the underlying California Court of Appeal opinion issued in March, Mercury and other insurers fought unsuccessfully to prevent the commissioner from requiring Mercury to reduce its homeowner insurance rates by 5.4 percent in 2012. Among other arguments, Mercury claimed it had a constitutional right to charge consumers for the costs of its "institutional," or "brand name," advertising that only benefits the insurance company's shareholders.

In a published decision, the court upheld Commissioner Jones' rate order prohibiting Mercury from requiring consumers to pay $2,806,152 for the image advertising costs because such brand name advertising did not provide consumers meaningful information about the insurance products sold by the insurer.

The Court of Appeal also rejected the insurers' arguments that Commissioner Jones' rate order was unconstitutional, noting that some of the insurers' arguments "amount[ed] to little more than hocus pocus" and were "smoke and mirrors - nothing more." The California Supreme Court refused to review the lower appellate court's decision.