In a sign the 2012 insurance wars have begun, a consumer group that routinely seeks to block rate increases has accused auto insurance giant Mercury General of illegally passing onto consumers the cost of its 2010 ballot measure campaign.
Consumer Watchdog is seeking to block a Mercury subsidiary's request to raise rates on its auto insurance policies by an average of 6 percent, a move Consumer Watchdog says will cost consumers nearly $89 million.
A challenge submitted to the state Department of Insurance earlier this month alleges that the company violated voter-approved auto insurance regulation laws by failing to disclose $16 million the parent company spent to support Proposition 17, an unsuccessful 2010 initiative to allow insurers to consider coverage history when setting premiums. Consumer Watchdog led the fight against that measure, arguing that it would result in higher rates for motorists who had a lapse in coverage.
Company officials deny the allegation.