California’s insurance commissioner is ordering Mercury Insurance to pay a $27.6 million fine for charging wrongful fees to its auto customers.
In announcing the largest fine against a California auto insurance company, Commissioner Dave Jones said Monday that Mercury charged customers the same amount – $27.6 million – in broker fees that his agency did not approve. According to Consumer Watchdog, a nonpartisan consumer advocacy group, consumers were charged the fees between 1996 and 2006. The group prosecuted the action with the Department of Insurance.
Jones says a judge recommended the fine after finding that the fees, ranging between $100 and $150, were wrongfully charged in 180,000 auto insurance transactions.
Mercury president Gabriel Tirador says in a statement that the company believes the decision “is contrary to California’s rate laws, due process, and basic notions of fairness.”
He says Mercury will challenge it in court.
Proposition 103, approved by California voters in 1988, requires the state commissioner to approve auto insurance rates.
The case is In the Matter of Mercury Insurance Company, Mercury Casualty Company and California Automobile Company, California Department of Insurance File No. NC-03027545; Office of Administrative Hearings Case No. N2006040185.
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