Ensuring insurance inequity

If you work as a bartender, junk dealer, longshoreman, actor or domestic worker, you might have had trouble getting home insurance from Mercury Corp. at one time or another.

And if you were a soldier who was transferred from one U.S. base to another, you might have been turned away when inquiring about car insurance.

Or so we are told in a 275-page report by the state Department of Insurance -- dug up by the San Francisco Chronicle -- which found widespread discriminatory practices and other infractions by Mercury from the mid-1990s until 2004.

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FOR THE RECORD:
Steve Lopez: The headline on Steve Lopez’s Feb. 10 column, and a reference in the column to critics of the Mercury Insurance Corp., said that a California ballot item —Proposition 17 -- would legalize practices for which the state fined Mercury after a lengthy investigation that ended in 2004. That is incorrect. Mercury was fined $300,000 for seven violations of state insurance regulations. The state dropped an eighth allegation of wrongdoing involving the use of lapses in coverage to calculate insurance rates, a subject addressed in Prop. 17.

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Why exactly, you may wonder, would a housekeeper or longshoreman have trouble getting house insurance?

Hard to say. Maybe domestics are more likely to live in high-crime areas. But wouldn’t a longshoreman beat the burglars to a pulp and toss them back out on the street?

Even the two Mercury officials I spoke to Tuesday afternoon couldn’t quite explain it.

But spokesman Coby King and lawyer Doug Hallet did say they think Mercury has been unfairly battered the last few days in news accounts of that 275-page report.

According to Hallet, “These are not issues that evidence misconduct or dishonesty, which was why we settled for $300,000, which is well below what things can be settled for. . . .”

That says a lot about the company, doesn’t it, trying to put a positive spin on a $300,000 fine for seven infractions of state regulations? Maybe Mercury could have run an ad during the Super Bowl:

“Mercury: We’re not as bad as you might think.”

True enough, not all the infractions were egregious, additional charges were dropped and some of the allegations by the state did not lead to legal action against Mercury.

Still, state examiners alleged that Mercury had violated Proposition 103, California’s landmark consumer protection law, inappropriately canceling policies and limiting access to preferable policies and rates.

Mercury -- which has shelled out enough money in campaign contributions to own Sacramento outright -- has also spent millions supporting Proposition 17, an initiative Californians will vote on in June that critics say would legalize some of the practices for which Mercury was fined.

If passed, Proposition 17 would require insurers to offer so-called “persistency” discounts to drivers who have good records and no lapse in coverage, which is a good thing for those people, naturally.

But under the misleadingly titled Continuous Coverage Discount Initiative, other drivers would be punished, according to the advocacy group Consumer Watchdog. If you have a lapse of 90 days or more in coverage for any reason other than foreign military service during a five-year period, you can be hit with a hefty surcharge.

Let’s say you move to New York, where you don’t need a car, and then move back to L.A. You could not only lose the discounted rate you had, but might have to pay a surcharge to get insurance at all.

Or maybe you’re temporarily transferred from Camp Pendleton to Camp Lejeune and leave the car behind, unused. When you get back home, you could lose your discount.

Kathy Fairbanks, a Proposition 17 spokeswoman, argued that under current law you already lose the discount in those circumstances and that under Proposition 17, you would at least be eligible to keep it.

Yes, but only at the “discretion of insurers.”

How do you feel about your chances?

“Any rating system that does not take into account the unique circumstances military personnel face in maintaining consistent auto insurance does them a disservice and is not acceptable to us,” said Michael Mattoch, a veteran and senior legislative counsel for USAA, a national insurance firm for soldiers and vets.

“Based on the potential harm to military personnel, we cannot support Prop. 17,” said Mattoch.

Another skeptic about the initiative is Joseph Mael, a Los Angeles therapist specializing in autism. Mael, who blogs for Santa Monica City Buzz, began his last posting like this: “Like many Californians, I was burned by Mercury auto insurance in the ‘90s. After my rates went up, despite a ‘discounted’ quote by the agent, I was left wondering what, exactly, I had done.”

Mael told me that he had been in an accident he didn’t cause and that his premium had shot up. He has since switched carriers but said that based on his experience and Mercury’s full-throttle campaign for Prop. 17, he’s a skeptic.

“I think it’s deceptive,” he said of the initiative.

So do I, and I’m a Mercury customer for both car and home insurance. I must say that my rates are pretty good, but each time Mercury is in the news, my pride takes another beating.

Should I quit now, or just wait until Mercury adds my profession to the 26 listed in the report as “unacceptable” for home insurance?

Dancers, ironworkers, artisans, soldiers, garbage collectors and door-to-door salesmen are on the list. Doesn’t it seem that “columnists” belong somewhere in there, maybe between garbage collectors and door-to-door salesmen?

steve.lopez@latimes.com