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Mercury Insurance Chair Refuses to Defend His Initiative, Prop 17

March 22nd, 2010

By Naomi Seligman

This Wednesday morning, two legislative committees will hold a joint hearing on Proposition 17, funded by Mercury Insurance. But it looks like Mercury’s Chairman George Joseph is not going to bother showing up for it.

The founder of Consumer Watchdog, Harvey Rosenfield, has challenged Joseph to attend the hearing in Sacramento to publicly defend his ballot initiative. Prop 17, which would allow insurance companies to raise premiums on drivers based on their history of buying auto insurance, is 99% funded by Mercury and a particular focus of Joseph’s decades long effort to evade accountability to consumers

Joseph has already spent $3.5 million on Prop 17 to advance his greedy cause. So what’s up George, why won’t you put your mouth where your money is?

Harvey Rosenfield wrote to Joseph late last week urging him to stop hiding behind his public relations flacks, front groups and radio ads and attend the hearing of the California Assembly Insurance Committee and Senate Banking, Finance and Insurance Committee to explain why voters in California should trust Mercury Insurance and its quest to enact Prop 17. In his letter to Joseph, Rosenfield points out that the insurance executive has privately defended his initiative in recent calls to several people who have spoken out against Prop 17. Now Joseph has an obligation to come forward and publicly defend this culmination of a decade-long attack on state consumer protections. Rosenfield writes:

The time has come for you to stop hiding behind your paid surrogates and defend your Captain Ahab-like quest to surcharge and discriminate against motorists before the public…This is not like one of those legislative hearings where you can do your dirty work through lobbyists and donations to the politicians. Will you be there to defend publicly what you are saying privately, or will it be another one of your flunkies who does your bidding? I’ll be waiting to see if you have the courage to face me and our publicly elected officials. If you don’t, sir, you have no business sponsoring a ballot measure in this state.

In the letter, Rosenfield notes state agency reports on Mercury’s history of discrimination, fines by state regulators and that Mercury ranks at the bottom of the most recent JD Power customer satisfaction survey: 27th of 32 large auto insurers.

Proposition 17 would create an insurance surcharge on drivers, including soldiers and seniors, who have had a lapse in car insurance coverage for virtually any reason during the past five years, or who missed a payment. Under the measure, people who stopped driving and didn’t need insurance for a time would be required to pay up to a $1000 more for car insurance when they sought to restart coverage. Currently, insurance companies are prohibited from imposing the surcharge in California. The initiative is opposed by consumer and citizen groups including Consumers Union, Consumer Watchdog, Consumer Federation of California, California Alliance of Retired Americans and VoteVets.org.

We were wondering if Joseph was going to step up after reading the letter, so earlier today I called Coby King, who serves as Mercury’s communications director, to ask if Joseph would be flying to Sacramento – but alas, no response.

More information at: StopProp17.org.

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Prop 17 Discourages Going Car-Free

March 18th, 2010

By Steven T. Jones, SAN FRANCISCO BAY GUARDIAN.COM – POLITICS BLOG

Efforts to encourage car-sharing and ways of getting around that don’t involve owning a car would be undermined by Proposition 17, a June ballot measure that I wrote about in this week’s cover story [1]. While I didn’t mention that impact in the story, it is of real concern to people like me who don’t own cars and encourage others to try the car-free lifestyle on for size.

The measure, sponsored by Mercury Insurance, allows companies to substantially increase monthly premiums on customers who haven’t had continuous insurance coverage. That would be one more barrier to people making the leap of faith to give up their cars and rely on bicycles or public transit, a switch that ought to be encouraged in increasingly traffic-congested cities such as San Francisco.

As I wrote about in another cover story last year [2], I made the decision several years ago to give up my car, although I still sometimes rent cars to visit my children. Consumer advocates say the cost of renting cars or using car-sharing services – particularly locally owned companies that can’t self-insure like the corporate behemoths – could increase and there would be a disincentive to consider trying it.

“Anyone who has used car sharing (or for that matter rental cars) as their means of transportation would almost certainly not be considered continuously insured and would face the Prop 17 surcharge if they had to go back to private insurance at some point,” Doug Heller, an insurance expert with Consumer Watchdog, told me.

Currently, the law allows insurance companies to issue discounts to those who have maintained continuous policies with them (Prop. 17 would expand that to allow drivers to change companies and keep their discounts, which would be offset by surcharges on customers who were new or had a lapse in their coverage), and those companies use that discount to actively try to discourage people from experimenting with car-free lifestyles.

Brian Smith, who works for an environmental nonprofit in Oakland, recalls getting that kind of hard sell when he made the leap and got rid of his car.

“When I cancelled my car insurance, AAA warned me not to. They said, ‘We will make it much more expensive when you come back.’ I said, ‘I sold my car, I don’t need car insurance.’ They said ‘We are just giving you a warning, Sir.’ I said, ‘Cancel it you fucking bastards. I’m never coming back.’ That was 10 years ago.’” Smith wrote to me about the issue.

Proponents of the measure say it would save some drivers $250 per year, while opponents (citing data from Mercury) say the surcharges for everyone else would be about $1,000 per year. So for the soldiers who go off to boot camp, the college students who get an internship in a city with good public transit or bikeways, unemployed individuals who need to trim expenses, or people who want to experiment with going car-free, they would all pay for more for insurance if they went back to driving a car than those who continuously maintained a car-dependent existence.

So, add this to the list of good reasons – and there are many of them in this week’s cover story — to oppose Prop. 17.

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We won! Voters Will Hear Truth On Prop 17 Premium Increases

March 16th, 2010


Just a quick note to let you know we won against Mercury Insurance in Sacramento Superior Court. Mercury’s lawsuit to censor the Attorney General and silence me and other critics of Mercury’s Prop 17 failed.

The official ballot materials written by the Attorney General are going to tell voters that Mercury’s Prop 17 will allow auto insurance companies to raise premiums for many motorists.

You can read our press release here or the Los Angeles Times coverage here.

Mercury’s legal attack shows it is willing to stop at nothing to deceive Californians about Prop 17, which will raise premiums on millions of Californians by as much as $1,000 per year, or possibly even more. Members of the military, students and others who stop driving for good reason will be unfairly punished.

Now we need to get these facts out to the voters. Please contribute as much as you can to help us win this just fight.

Thanks for all your support.

Harvey Rosenfield

Consumer Watchdog Founder


Have you ever had a lapse in auto insurance coverage for any reason? Tell us your story.

To support our work, please make a contribution here:

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Battle over insurance measure continues in court Friday

March 11th, 2010

Battle over insurance measure continues in court Friday

Posted by Marisa Lagos – SFGate.com Politics Blog

Looks like the California Attorney General’s office agrees with itself.

In advance of a court hearing Friday, where a judge will hear arguments over ballot language for Proposition 17, the AG’s office filed a brief essentially defending its decision last month to change the measure’s ballot summary.

A little background: Proposition 17, backed by Mercury Insurance Group, is on the June ballot. The measure would change the state law that governs insurance rates by allowing companies to consider a drivers’ coverage history when they sign up (currently, continuous coverage rates — i.e., discounts for maintaining insurance — only apply while you stay at the same company). And that’s where the problem lies.

Backers say the change will encourage competition by letting drivers shop around more, and that current, voter-approved laws punish good drivers who want to change insurers.

Opponents charge that it’s a veiled attempt to hike up rates for thousands of drivers, including servicemen and women, who had a lapse in their insurance for any reason. And, they argue, it will let insurers impose surcharges that are outlawed under Proposition 103, the 1988 landmark car insurance measure approved by voters. After they accused Attorney General Jerry Brown of caving to the huge insurance company — a contributor to his gubernatorial run — Brown’s office changed the ballot summary to include this sentence:

“Will allow insurance companies to increase cost of insurance to drivers who do not have a history of insurance coverage.”

(An aside: that story we linked to above, by colleague Carla Marinucci, set off a whole different drama over Brown’s spokesman taping phone calls with reporters, which led to an investigation and that spokesman resigning.)

Mercury objected in court, and now we have tomorrow’s court hearing.

In that brief filed by the Attorney General’s office, the state argues that the proponents don’t think the ballot summary is untrue, but should be stricken because the cost of insurance are the function of rates set by the Insurance Commissioner, and that Prop. 17 doesn’t actually contain any language about rate setting.

“The fact of the matter is that if Proposition 17 passes, insurance companies will be allowed to do two key things: (1) lower the cost of insurance to drivers who qualify for the new discount; and (2) increase the cost of insurance for drivers who do not qualify for the new discount. Thus, voters would be misled if the title and summary mentioned only the new discount but not the corresponding surcharge,” the brief reads.

Voters, the AG’s office argues, would be misled into thinking the measure is just about offering a discount without that key sentence.

The Prop. 17 campaign calls the measure “common sense” and said in a news release today that opponents are “intentionally misleading voters.”

Whew. Friday’s hearing should be fun. But first, we need a nap.

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Jerry Brown’s role as truthsayer could give him the advantage over megabucks Whitman

March 11th, 2010

Posted by Jamie Court

A lot of progressives in California are worried of late that California’s Attorney General Jerry Brown might talk a little too much truth, and that will hurt his gubernatorial run against Megabucks Meg Whitman, e-bay pioneer who has already spent around 40 million selling California on some very popular lies that polling no doubt said she should tell.

Brown’s past statements over a four decade political career could be a gold mine for opponents, as the Los Angeles Times reported recently. Particularly for Whitman, whose been telling some popular whoppers in her paid-for advertising about the evils of welfare recipients, how only a business leader can save government, and why it’s waste not a deficiency of tax revenue that’s driving budget deficits.

A little noticed legal brief Brown just filed as Attorney General in a Sacramento Court shows his true power as an honest public servant willing to look hard at issues and tell the truth about them. It’s a voice he needs to stay connected to in order to win the governor’s office.

Brown’s legal brief is headed for a show down in Sacramento Superior Court Friday over June ballot measure Proposition 17, which is funded by 99% by one insurance company, Mercury Insurance, that claims it’s spending millions only to save drivers money. Brown set the record straight in the official ballot title and summary, saying Proposition 17 “will raise premiums” on some drivers, but the insurance company doesn’t want the public to hear the truth. It’s trying to block Brown from leveling with Californians.

Brown’s brief lays out a complicated issue to the Court clearly and simply, an honest broker voice Californians hunger for in other matters. He fights on a controversial issue for the right to make it simple for voters, and to prevent a big insurance company from promising only the sweet without discussing the sour. Here are some excerpts from the Brown brief:

“The proponents arguments that the Attorney General cannot tell voters that this measure would allow insurance companies to increase the cost of insurance for certain drivers is without legal merit.”

“If the title and summary does not make voters aware that the measure will allow surcharges, voters will be misled into thinking that Proposition 17 simply allows insurers to offer a new discount.”

“What is certain is that if any company decides to offer this new discount will be allowed to surcharge drivers who don’t qualify for it. And that is all the title and summary says. The fact that car insurance is complicated should not prevent voters from being accurately and fully informed about the key components of Proposition 17.”

“The proponents and opponents of Proposition 17, as well as the Department of Insurance, are all well aware that 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.”

Brown deserves big credit for taking an honest stand with voters and angering a big insurance company who has used its political influence to get around the law and elect politicians beholden to it.

Friday is judgment day for Mercury Insurance on Proposition 17 and Brown’s a good bet to win. If Jerry Brown can sustain the voice he found in this case, he can also puncture Whitman’s bubble and win the voters’ verdict in November with some simple populist truth. Like insurance companies don’t spend millions on ballot measures to save policyholders money.

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Mike D’Arelli, Mercury’s Lackey, attacks Stop Prop 17 while avoiding Mercury's lies

March 4th, 2010

by Naomi Seligman

This week, Harvey Rosenfield filed a lawsuit in Sacramento Superior Court urging the court to remove false and misleading statements that Mercury Insurance Company has made in its ballot arguments that will appear in the Official Voter Guide for the June ballot.

In the lawsuit, Rosenfield writes:

Mercury Insurance Company is attempting to put one over on the voters of California and this Court. Mercury and its surrogates are entitled to use the space allotted to them in the official Ballot Pamphlet to make the most persuasive case they can in support of the initiative…But the law does not allow Mercury to use the official Ballot Pamphlet to propagate false and misleading statements regarding either the terms of its proposed initiative or the state of existing law. And that is exactly what Mercury has done…

The 202-page lawsuit identifies numerous false and misleading statements made by Mercury’s ballot signers.  For example, responding to criticism of Prop 17 by military vets and USAA, an insurance company that serves the armed forces, Mercury claims in its argument that soldiers living stateside are exempted from Prop 17’s surcharges, and that California consumers are currently charged using the “continuous coverage” factor that Prop 17 is promoting. These assertions are false, as explained in a brief summary below.  The lawsuit can be downloaded here

So, while we are trying to get the facts to the voters, the Alliance of Insurance Agents of Brokers Executive Director Mike D’Arelli is trying his best to obfuscate the real goals of Mercury Insurance. In today’s Fresno Bee story on Rosenfield’s lawsuit, D’Arelli tries his best hand at defense, not by explaining why Mercury is lying to Californians, but, you guessed it, by attacking us.

It’s pretty pathetic when insurance agents actively work against the interests of their customers. Mike D’Arelli is doing a huge disservice to those he represents. We would say we were surprised, but we’re talking about a campaign that is sponsored by Mercury Insurance, an under-handed, dishonest and discriminatory company.

But facts are stubborn things, and Mr. D’Arelli can’t make Mercury’s lies go away by simply not addressing them.

We, on the other hand, are happy to go through Mercury’s lies in the ballot argument. Here are some of those misleading claims made by Mercury:

>  Impact on the military. Prop 17’s surcharge for drivers who have not had five years of continuous insurance coverage has a limited exception for only those soldiers who are “absen[t] from the United States while in military service.”  Soldiers serving the country on base in the states are not exempt, even though they might not need to have and pay for automobile insurance while on base.  Nonetheless, the Rebuttal Argument falsely claims that the ballot measure exempts soldiers who “cancel insurance when serving overseas or in another state” from its surcharges.  When Mercury sponsored SB 841 in 2003 to allow the same surcharge against California motorists, it included an exemption for soldiers serving in other states. But Prop 17 has no such protection for stateside soldiers.

> Current law. Prop 17 creates a new rating factor in order to circumvent the consumer protections of current law and surcharge many good drivers in California.  But throughout its ballot arguments, Mercury pretends that the new rating factor it proposes to create, “continuous coverage,” already exists under current law. The Argument in Favor of 17 states: “Under current law, drivers who have maintained auto insurance with the same company are eligible for a continuous coverage discount.” This is untrue. The language of Proposition 17 itself states that it creates a new rating factor “in addition to” and “[n]otwithstanding” current law. Mercury is falsely equating discounts for motorists who remain with the same company for a period of years, which are permitted under Proposition 103, with a new rating factor the company wants to use to base premiums on whether or not people can show they have been continuously insured by any company with no lapses over 90 days over a five year period and have had no missed payments. Mercury has made the same false statements in previous court cases, and the courts have consistently rejected Mercury’s effort to equate the two.

> Surcharges. Mercury’s ballot Argument in Favor claims that “Yes on 17 eliminates an existing surcharge for changing companies” and its Rebuttal says that Prop “17 would allow drivers to take your continuous coverage discount with you.” There is no existing surcharge for changing companies, and there is no existing “continuous coverage discount.” Mercury’s claims are false. Prop 17 would create a surcharge on good drivers who have not had five years of continuous auto insurance and would override Proposition 103’s ban on surcharges against the previously uninsured or those who have had a lapse in coverage, even if these motorists are good drivers.

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Mercury Insurance Company Has Sued to Silence Me!

March 4th, 2010

Wow! Mercury Insurance has sued to stop me, former Attorney General John Van De Kamp, and former Insurance Commissioner John Garamendi from warning the public in the Official State Voter Guide about the huge premium increases to come under Mercury’s Prop 17 for millions of drivers.

Mercury also says it’s going to court against Attorney General Jerry Brown, who has just issued his official analysis of Prop 17 for the Voter Guide. Brown states clearly that 17 will allow insurance companies to raise premiums for those who have a lapse in their auto insurance coverage or missed a single insurance payment.

We already knew this corrupt insurance company would spend tens of millions of dollars to lie to voters about Prop 17 — it spent $3.5 million just to stick the measure on the June ballot. Now Mercury is trying to censor our views and deceive the voters–using taxpayers’ money.

We’re not going to let Mercury get away with it! Today we filed our own lawsuit against Mercury, asking the courts to strike the devious lies and tricks that Mercury wants to put in Voter Guide. You can read the lawsuit here.

The showdown over our right to tell voters the truth about Prop 17 will be in Sacramento Superior Court on Friday March 12th. I am confident of complete victory, but we could sorely use your help to support the legal team we have had to hire to fight back against Mercury’s attempt to keep voters in the dark about its dangerous Prop 17.

Please make a contribution today to our legal defense fund and the campaign to stop Prop 17. You can read the ballot arguments we are suing to protect here.

Thanks again for all your support,

Harvey Rosenfield

Consumer Watchdog Founder, and Author of Prop 103

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Stop Prop 17 Coalition Partners

March 3rd, 2010

Stop Prop 17 Coalition Partners

California Federation of Teachers

Service Employees International Union (SEIU)

California Labor Federation

California Nurses Association

VoteVets.org

California Alliance for Retired Americans

Consumers Union, non-profit publisher of Consumer Reports

Consumer Action

Consumer Federation of California

Consumers for Automobile Reliability and Safety

United PolicyHolders

Alameda County Central Labor Council

San Mateo Country Central Labor Council

Los Angeles County Democratic Central Committee

Alameda County Democratic Central Committee

Fresno County Democratic Central Committee

San Francisco County Democratic Central Committee

San Mateo County Democratic Central Committee

Dolores Huerta

Congressman John Garamendi

John Van de Kamp, Former California Attorney General

Assemblyman Hector De La Torre

Assemblyman Dave Jones

To join the opposition against Prop 17, please contact Naomi Seligman at 310.392.0522 ext 318 or Naomi@consumerwatchdog.org.

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False and misleading lawsuit

February 25th, 2010

By Naomi Seligman

Talk about irony: Mercury Insurance and its front group Cal-FAIR have filed a lawsuit in Sacramento today attacking the ballot argument against Proposition 17 as “false and misleading.” Really? Seems Mercury and Cal-FAIR win top prize in that category. Their endless stream of lies, hyperbole, and distortions boggle the mind. To say it is disingenuous would be generous, to a fault.

The 62-page lawsuit – over our 750 words — filed by Mercury’s campaign committee asks a Sacramento judge to strikeout or rewrite large portions of the arguments against Prop 17, which were wrtten by consumer and veterans advocates as well as former Insurance Commissioner John Garamendi and former Attorney General John Van de Kamp. Click here to download a copy of the lawsuit.

Proposition 17, sponsored and funded by Mercury Insurance, would allow insurance companies to surcharge drivers based on their history of purchasing auto insurance. That is currently illegal in California by virtue of the 1988 insurance reform measure Proposition 103.

Mercury’s Proposition 17 suit claims that Proposition 103 does not ban consideration of prior insurance coverage history, notwithstanding numerous decisions by CA Dept. of Insurance and the courts in the past.

In its lawsuit, Mercury asks the Court to change or delete 10 sections from the 500-word argument against Prop 17 and three sections from the 250-word rebuttal.

The argument against Prop 17 was signed by Consumer Watchdog, Consumers Union, the nonprofit publisher of Consumer Reports and VoteVets.org.

Harvey Rosenfield, the founder of Consumer Watchdog had this to say when he read the suit:

Mercury Insurance is lying to the Court, just as it has been lying to voters and has lied to regulators, lawmakers and the courts in the past. This lawsuit is a total waste of court resources, but Mercury will spend any amount of money to have its way and deny the public honest information about its attack on responsible drivers who can’t afford Prop 17’s premium hikes.

Mercury wants to win the surcharge battle, at any price.

For more information about Prop 17, visit: www.StopProp17.org

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Jerry Brown gets it right on Prop 17's Title & Summary

February 24th, 2010

Jerry Brown gets it right on Prop 17’s Title & Summary

by Jamie Court

California Attorney General Jerry Brown has issued his final ballot label for Proposition 17, the Mercury Insurance-financed ballot measure to surcharge those with lapses in auto insurance coverage.  Brown got the ballot label right this time, acknowledging Prop 17 allowed insurers to increase premiums, as well as lower prices, based on whether a driver has a lapse in insurance coverage.

Ballot measure labels are crucial because they often are all voters have to go on before casting a vote, and Mercury Insurance is sure to spend $10 million to convince voters there’s no premium increases involved in Prop 17.

Brown drew big fire in the media when in October he altered an earlier version of the ballot title and summary from August to omit the earlier reference to premium increases. When Brown’s communications director tried to kill a story in the San Francisco Chronicle talking about the change and a contribution to Brown from Mercury Insurance, the reporter discovered her conversation was being taped without her knowledge. This led to the spokesperson’s resignation.

In today’s final ballot version Brown tells the full story behind Prop 17.  See the original title prepared by Brown from August, the altered October version, and the final ballot label, which voters see in the booth,  and final ballot pamplet summary released today. The arguments for and against in the ballot pamplet can be found here.  Find out more about the campaign against Prop 17 at StopProp17.org

Jerry Brown deserves credit for doing his homework and getting this complicated issue right for voters.

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