Mercury Insurance Group agreed to a quarter-million dollar settlement with the California Department of Insurance (CDI) for alleged claim-handling violations.
The CDI conducted a review of consumer complaints filed against Mercury Insurance, Mercury Casualty, and California Automobile Insurance Companies, collectively known as Mercury Insurance Group. Of the 121 files reviewed, a total of 258 violations were alleged to have occurred from Jan. 2004 through Dec. 2005. These violations involved several of the company's claim-handling practices, including unreasonable delays in affirming or denying coverage and issuing claim payments.
“It is vital that insurance companies put their customers first,” said California Insurance Commissioner Steve Poizner. “I'm pleased that Mercury has agreed to this settlement, which demonstrates that claim-handling violations will not be tolerated in California. Mercury recently announced that it is reducing rates for policyholders, and I am hopeful that the company will continue to put its customers first. The Department of Insurance continues to make sure that all insurance companies are obeying the laws in place to protect consumers.”
Despite agreeing to the settlement with the CDI, Mercury officials took issue with the charges of claim-handling violations.
“While we have agreed to a settlement of claim-related issues with the CDI, we disagree with the Department's findings,” said Gabriel Tirador, Mercury Insurance Group's president and CEO. “In order to put this matter behind us, however, we have agreed to this settlement. Mercury insures more than two million California drivers and the company received less than 50 justified complaints in 2006, which is a 26 percent drop from 2005. Initial reports indicate that the number of justified complaints will drop yet again in 2007.”
Mercury will pay the Department of Insurance $250,000 in monetary penalties, as well as $50,000 for CDI's legal fees and enforcement costs associated with the case. Additionally, if the company does not improve its performance standards — as evidenced by a 15 percent reduction in justified complaints — by Dec. 31, 2008, it may be ordered to pay an additional $200,000.
Mercury pointed to the decrease in justified complaints from 2005 to 2007 as an indicator that they will meet the CDI's stipulations and avoid the additional $200,000 fine.
To view the complete settlement click here.
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