California Insurance Commissioner Orders Mercury Insurance to Pay $27.6 Million Fine

$27.6 million fine in connection with unapproved “broker fees” charged to California consumers buying auto policies.
The California Department of Insurance said Monday that the Los Angeles-based insurer did not obtain the commissioner’s approval for the fees, resulting in consumers paying more than the rates approved by the commissioner. From 1999 through 2004, Mercury insurance agents charged and collected unapproved “broker fees” on more than 180,000 policy transactions, according to the CDI.
CDI said brokers are allowed to charge fees, but those identified as brokers in this case “were actually functioning as agents, and therefore, their fees had to be filed as part of Mercury’s rate filing and approved by the commissioner, which Mercury failed to do.”
Proposition 103, passed by voters in 1988, prevents auto insurers from charging excessive rates and requires that rates be approved by the commissioner, the CDI noted in its statement.
From http://www.sacbee.com/news/business/article6114510.html