NEWS RELEASE:
Contact: Harvey Rosenfield, 310-345-8816; or Naomi Seligman, 310-392-0522, ext. 318
Court to Decide Whether Mercury Insurance Is Telling Truth About Prop 17
Mercury Wants Court to Censor Attorney General and Silence Opponents;
Desperate to Hide Prop 17 Car Insurance Price Hikes From Voters
Sacramento, CA – Mercury Insurance’s attempts to deny voters complete and truthful information about Proposition 17 will be heard in a Sacramento courtroom this afternoon. Superior Court Judge Allen Sumner will consider Mercury’s challenge to the Attorney General’s summary of Proposition 17, the Mercury-sponsored June ballot measure to allow insurance companies to raise car insurance premiums on Californians based on their history of auto insurance coverage. Also before the court is a Mercury lawsuit challenging the ballot arguments that were made against Prop 17 filed by opponents of the measure. A decision must be issued no later than Monday, when the official Voter Guide must be sent to the state printer. The court could rule from the bench today.
At the heart of the cases is Mercury’s attempt to hide from voters the auto insurance surcharges that Prop 17 will allow.
The auto insurance company claims that the Attorney General’s Official Title and Summary of the initiative should only describe alleged discounts created by Prop 17, but not mention the surcharges it would also create. In the second case, Mercury wants the Court to delete about 60% of Prop 17 opponents’ ballot arguments. Consumers Union, Consumer Watchdog and VoteVets.org authored the main argument against Prop 17. Former Insurance Commissioner John Garamendi and former Attorney General John Van de Kamp authored the Rebuttal to Mercury’s pro-Prop 17 argument.
Mercury’s lawsuit to silence Prop 17’s opponents is based on the same deceptions that permeate the insurance company’s own arguments in favor of Prop 17. Mercury’s ballot arguments falsely state that the Proposition 17 rating factor is already allowed by law, and misstate what will happen if Proposition 17 passes. Consumer Watchdog founder and ballot signer Harvey Rosenfield counter-sued to challenge the false and misleading arguments that Mercury has written for the June election Voter Guide.
“Mercury Insurance wants to spend millions to lie to the voters about Prop 17, just as the company has lied to motorists, the news media, Insurance Commissioners and the courts in the past,” said Rosenfield. “But under California law, Mercury’s right to campaign for Prop 17 does not give it the right to make false or misleading statements. Mercury started this legal fight by suing to stop anyone from telling the truth about its initiative. Today will be judgment day for this deceptive company.”
Front and center for the Court this afternoon is the question of whether or not the Attorney General correctly describes Prop 17 in the Official Title and Summary when he explains that Prop 17 “will allow insurance companies to increase cost of insurance to drivers who do not have a history of continuous insurance coverage.”
The Attorney General’s summary follows the analysis by the California Department of Insurance as well as a California Court of Appeal decision in a case involving nearly identical legislation sponsored by Mercury. Every independent authority that has reviewed Mercury’s proposal has made it clear that under California law, if one group of customers gets a discount, another group of customers must pay a surcharge in order to ensure that there is enough money to pay all the insurance claims. That rule holds for Prop 17: if some drivers get a discount – customers without a lapse in auto insurance coverage over 90 days during the preceding five years – then others pay a surcharge – for not purchasing insurance at some point in the past, even if they didn’t need it, or if they missed a single payment. California voters prohibited this insurance practice when they passed Prop 103 in 1988 in order to end pricing schemes that allowed insurance companies to overcharge good drivers. If Prop 17 were enacted, millions of good drivers, including military personnel who didn’t need auto insurance while they lived on base, will face surcharges of as much as $1,000 when they need to buy auto insurance again. The result will be a surge in the number of uninsured motorists, as occurred before Proposition 103.
Because California voters are naturally suspicious of insurance company funded ballot initiatives, and because no one wants to pay higher auto insurance rates, Mercury has cornered itself into a political argument that relies on the lie that Prop 17 is only about discounts. Throughout its litigation papers, Mercury makes several different arguments for why the Attorney General and initiative opponents have it all wrong about Prop 17. But each argument fails because it denies a basic truth that, as the AG explains in his brief: “in the world of car insurance pricing, you cannot have a discount without a surcharge. The only people who probably are not aware of this principle are the voters.”
Links to some of the key briefs in the cases are available here: http://bit.ly/9Pr8z0
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