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Jan 01, 2003
CONTACT: Doug Heller - 310-392-0522 x309
Senators Pass Mercury Insurance Surcharge Bill 34-1; Insurer Has Contributed Millions to State Politicians
SB 841 (Perata) Is Opposed By Consumer Groups, Low Income Groups and Insurance Commissioner; Bill Vetoed Last Year By DavisSacramento -- Legislation that would allow auto insurers to surcharge drivers who have had a lapse in insurance coverage or were previously uninsured was approved by the California Senate today on a vote of 34-1. SB 841 (Perata -- Oakland) is sponsored by Mercury Insurance, which has contributed over $1.2 million to politicians since 2001, including at least $374,700 since last September. A nearly identical bill was vetoed last year by Governor Davis.
The bill, which is opposed by the state's consumer groups and low-income advocates as well as Insurance Commissioner Garamendi, would illegally violate Proposition 103. The voter-approved insurance reform law bars companies from penalizing a driver due to a lack of prior insurance. Mercury Insurance currently faces a California lawsuit for the illegal use of the surcharge that is proposed in the legislation.
"Mercury Insurance is trying to circumvent the governor, the regulator and the courts by throwing money at the legislature," said Doug Heller, a consumer advocate with the Foundation for Taxpayer and Consumer Rights (FTCR). "A bill with this much opposition does not get out of the Senate with only one lone no vote, unless it was greased with campaign cash. We are witnessing chronic corporateering in the Capitol, in which the will of corporate contributors is enacted at the expense of the public interest."
The bill's author, Senator Don Perata, received $25,000 from the company prior to the bill's introduction last year and another $10,000 from Mercury Insurance in September 2002. FTCR noted that the Democratic Party has received the bulk of the contributions from Mercury, amounting to more than $1 million since 2001. Click here to view a detailed timeline of Mercury contributions.
Mercury Seeks to Evade Law, Regulation and Litigation
"Why should those who cannot afford continuous coverage be penalized by insurance companies simply because they are poor and auto insurance costs too much? This legislation discriminates against those with small paychecks and big bills who choose not to drive because of financial stresses at certain times in their lives," said Heller.
According to data on file with the Department of Insurance, under the Mercury scheme, a good driver with 22 years driving experience -- but without continuous coverage -- would pay $208 more per year than an equivalent driver who similarly signed up with Mercury but had continuous insurance coverage.
Consumer Groups will sue to invalidate SB 841 if enacted
The legislation would end up costing the state hundreds of thousands of dollars in legal fees, if it were enacted. The state would be forced to defend lawsuits that challenge the legality of a bill that amends and violates Proposition 103. In past years the courts have struck down illegal amendments to Proposition 103.
The bill is opposed by:
Department of Insurance/ Commissioner Garamendi ACORN
National Council for La Raza (NCLR)
Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA)
Los Angeles Alliance for a New Economy
JERICHO: A Voice for Justice
Labor/Community Strategy Center (Bus Riders Union)
Californians for Justice Education Fund (CFJ)
Gray Panthers California
Bet Tzedek Legal Services
Strategic Action for a Just Economy (SAJE)
Center for Public Interest Law
San Francisco Tenants Union
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