Caption California Insurance Commissioner Dave Jones
California Insurance Commissioner Dave Jones hit Mercury Insurance with a huge fine for charging unapproved broker fees to consumers. Jones contends from 1999 to 2004 — in spite of being advised by the department not to do so — Mercury’s agents charged broker fees.
Jones said Mercury did not have the department approval given to it by Proposition 103. It says auto insurance companies cannot charge excessive rates. The proposition requires department approval for all fees.
And Mercury charged fees in 180,000 transactions.
Jones fined Mercury $27,593,562. The size of the fine has the insurance industry buzzing. The fine size was recommended by an administrative law judge who looked at the commissioner’s argument and Mercury’s response.
“Mercury auto insurance consumers paid $27.5 million in unapproved fees. While the $27.5 million fine against Mercury is significant, it is commensurate with the amount of money that was unlawfully collected from Mercury policyholders,” Jones said.
Consumer Watchdog did an analysis of the 15-day proceeding and said the fees went from $100 to $150 per policy.
Mercury — as you suspect — vehemently disagrees with the commissioner and the judge’s decision. “We strongly believe that this decision is contrary to California’s rate laws, due process and basic notions of fairness,” the company said in a statement.
Source links: California Department of Insurance, Insurance Business America