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home / insurance / in the media

The Los Angeles Times
Sep 23, 2003

by From Times Staff Reports

RECALL NOTEBOOK; Group Accuses Davis of Bill-Signing Deal

A consumer watchdog group charged Monday that $175,000 in contributions by Mercury General Corp. to Gov. Gray Davis' anti-recall effort were in exchange for the governor's signature last month on a car insurance bill the company wanted.

Officials of the Foundation for Taxpayer and Consumer Rights sent a letter to U.S. Atty. McGregor W. Scott of Sacramento asking for an investigation of what it alleged was an illegal agreement between Davis and Mercury, an insurance company and strong supporter of Davis. The letter noted that since Aug. 2, when Davis signed the bill, Mercury has made substantial donations to the governor, including $175,000 in the past 10 days.

"It is our belief that these contributions are a direct response to, and a result of, an advance agreement between Gov. Davis and Mercury General," said the letter by Jamie Court and Douglas Heller. The bill, similar to one Davis vetoed last year on grounds that it violated reforms enacted in 1988's Proposition 103, authorizes insurance companies to give discounts to motorists who have continuously insured themselves with one or more companies. Opponents of the measure said the newly signed law also authorizes motorists without insurance to be charged more -- in effect, they say, subsidizing the discounts.

Court and Heller said these prices unfairly discriminate against low-income drivers and violate a key feature of Proposition 103, which prohibits insurance companies from calculating rates based on a driver's history of no coverage.

But Steve Maviglio, Davis' press secretary, called the allegations preposterous.

"George Joseph, CEO of Mercury, said his company had been "a player for 38 years in California," and had given Davis at least $220,000 from 1999 through September 2002. He defended the $175,000 donations after Davis signed the bill. He noted that last year Mercury had given Davis $20,000 before the bill reached the governor, who vetoed it.



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