1. BESTWEEK PERSPECTIVES
A Losing Proposition
Mercury, Poizner Make Millions Disappear in Primary Election Regulation
In the end, the insurance giant just couldn’t convince In the California scheme of things, perhaps Mercury
Californians it had their interests at heart. General’s losses don’t amount to much. Sitting Insurance
Despite $16 million in campaign spending by Mer- Commissioner Steve Poizner spent approximately $25
cury General, a controversial automobile insurance million of his own money on a race for governor, only to
ballot question lost at the ballot box. The Mercury- be crushed by Meg Whitman in both spending — who
founded and funded Californians for Fair Auto Insur- spent three times that just from her own eBay fortune
ance Rates sought to convince voters that under — and in the vote — where she doubled his total.
Proposition 17 some 80% of them would save money But the June 8 primary wasn’t all about money. While
on their car insurance by becoming eligible for lon- as surprised as anyone, 16-year Department of Insurance
gevity discounts even if they switch insurers. Extend- enforcement attorney Brian FitzGerald holds a tenuous
ing those discounts is now illegal under Proposition lead over veteran Assemblyman Mike Villines, despite
103 for a reason, opponents argued, saying the effect investing in little more than the filing fee, a blog and a
would have been to necessitate discriminatory higher Facebook page. Counting of outstanding mail-in votes,
rates against drivers with any gap in their coverage, provisional ballots and damaged ballots could go on for
including the poor and military personnel. weeks, according to the Secretary of State’s office.
Faced with a more than 15:1 spending disadvan- Meanwhile, FitzGerald is back at work — though
tage, foes including the Campaign for Consumer Rights maybe with a closer eye on the corner office.
adopted the slogan, “When was the last time an insur- —Sean P. Carr
ance company spent millions to save you money?”
That catchy bit of politics may have had an impact, Got News?
said Samuel Sorich, president of the Association of Cali- Tell us about it at news@ambest.com
fornia Insurance Companies, who supported Prop 17.“It BestWeek is looking for press releases from insurers, agen-
did tap into what is an inherent skepticism,” he said. cies, brokers, reinsurers, state insurance departments,
insurance trade groups, and consulting and equity analysis
As Prop 17 opponents raised Mercury’s history with companies. These should concern timely news events such
regulators as an issue, the Department of Insurance as earnings; litigation; state rate actions; mergers and acquisi-
made fresh allegations of wrongdoing by the insurer, tions; reports on industry trends; legislative actions; promo-
including the overcharging of customers. The Yes on 17 tions of senior executives; state disciplinary actions; the exit-
ing or entrance from specific lines or states; and upcoming
campaign sought to separate the merits of the question industry conferences and events.
from Mercury’s regulatory issues — even while Mercury Stay on top of the news 24/7 by visiting www.ambest.
continued to fund virtually the entire enterprise. com/newsroom, where electronic news articles are released
Mercury “got taken for a ride” by political consultants, throughout the day.
said Jamie Court, president and chairman of Consumer Access BestWeek online at http://www.bestweek.com
Watchdog and a board member of its CCR affiliate. Prop 17,
which lost by a 4% margin, was never going to pass, he said.
“The entire coalition is disappointed with the out- BESTWEEK Editorial
US/CANADA
come, as we all believe California consumers will ulti-
Editor: Caroline Saucer, 908-439-2200, ext. 5774
mately end up losing as a result,” Mercury said in a com-
Managing Editor: Rick Cornejo, News Editor: Mark Dobrow
pany statement.
Washington Bureau Manager: Jesse A. Hamilton,
With the same amount of money, Mercury could
Washington Correspondent: Sean P. Carr
have given $250 rebates to 64,000 new policyholders. Senior Associate Editors: Meg Green, Fran Matso Lysiak,
Because the company claims a better-than-96% renewal Senior Associate Editor, Best’s Review: Lori Chordas
rate, that might have given the insurer’s customer rolls
a nice boost — which wouldn’t hurt. Mercury General Assistant Vice President News: Marilyn Ostermiller
Group’s share of the California private passenger vehi- Group Vice President Communications: Lee McDonald
cle insurance market slipped from 9.4% to 8.7% from Circulation: Linda McEntee
2008 to 2009. It dropped from being the third-largest
such carrier to fifth-largest, according to BestLink, which Production Services
provides online access to A.M. Best’s Global Insurance & Senior Manager: Susan L. Browne, Supervisor: Ellen B. Wagner
Banking Database. Senior Designer: Joanna Herren
20 BESTWEEK U.S./CANADA • June 14, 2010