Statewide Reductions of 20% in Uninsured Motorist Coverage and 15% in Bodily Injury Liability Directly Related to Loss Savings from Passage of Proposition 213
LOS ANGELES, March 9 — The Mercury Insurance Group, now California’s sixth largest automobile insurer and one of the fastest growing in the nation, announced today that its recent filing reducing rates for auto insurance has been approved by the California Department of Insurance. George Joseph, CEO, said that the Department’s approval of the rate reductions is effective on April 1, 1998.
The Company’s California loss experience in the bodily injury and uninsured motorist lines over the last year has been excellent, Joseph said. A large part of that improvement, according to Joseph, represents sharply lower bodily injury claims, and is primarily the result of the passage of Proposition 213 in November 1996 as well as legislation requiring proof of insurance for the registration of any motor vehicle, both of which new laws became effective on January 1, 1997. Proposition 213 prohibits recovery of non-economic, or “pain and suffering,” awards by drunk drivers or uninsured motorists injured in automobile accidents. Such accident victims are entitled to recover their economic losses.
Joseph said that California’s Insurance Commissioner, Chuck Quackenbush, should be given major credit for making these rate reductions possible. The Commissioner authored Proposition 213 and actively campaigned for its passage. It received an overwhelming 78% approval by California voters. Legal challenges to the measure have, to date, been unsuccessful, with two California appellate courts upholding its constitutionality.
The new law requiring proof of insurance (AB650), passed by the legislature in 1996 and made effective January 1, 1997, has produced a significant reduction in uninsured motorist claims.
Joseph stated that a number of other factors have contributed to a decline over the last several years in the number of bodily injury claims filed and the size of the average bodily injury loss. A major factor, he said, has been the effectiveness of anti-fraud measures undertaken both by the Company and the Department of Insurance. Mercury has been a pioneer in fighting fraudulent claims with the establishment of its SIU (Special Investigation Unit) in 1978. Other factors contributing to lower losses, Joseph added, have been stricter enforcement of drunk driving laws, the greater number of vehicles with air bags, the enforcement of seat-belt laws, and the increased proportion of safer late-model vehicles in the state’s automobile population.
As a result of the Company’s loss control management, the Mercury Group’s average loss ratio (losses related to premium earned) has for many years ranked among the lowest of all California automobile insurers. This, said Joseph, is the foundation of the Company’s highly competitive rates. According to annual surveys conducted by the California Department of Insurance over a number of years, Mercury has consistently ranked as one of the lowest cost providers of automobile insurance in the state.
Under the newly approved rates and rating plan, all drivers insured by Mercury throughout the state will experience a rate reduction, although the size of the reductions will vary.
Mercury markets its insurance through independent insurance agents appointed by the Company. These agents are independent businessmen who are professionals trained in insurance and licensed by the California Department of Insurance.