Laws for Sale: How Mercury Insurance is Buying Legislation in California

by Seth Jared , Technorati

According to a recent poll, 66% of Americans believe that the distribution of wealth in America is unfair. This sentiment has been general in nature. The Occupy Wall Street movement, which has enjoyed large public moral support, has been criticized for failing to make specific demands.

Here then is a specific example of how the rich are able to abuse their wealth and buy laws from our government. It’s happening right now in California, where a large insurance company has sponsored and funded a potential misleading piece of legislation that impacts people’s car insurance rates.

By law, California requires each driver have basic car liability insurance. However even this minimum can be difficult for many Californians to afford. While the state does have a program for extremely low income drivers, there are millions in between extreme poverty and the Middle Class who are impacted by rate changes.

In 1988, voters passed Proposition 103 in California despite a $60 million ad campaign by various insurance companies to defeat it. The Proposition effectively rolled back insurance rates and instituted a number of consumer protections.

Now, Mercury Insurance in sponsoring a 2012 piece of legislation called the "2012 Auto Insurance Discount Act". George Joseph, chairman of Mercury, has already contributed $8.1 million to PAC supporting this law. This legislation would legalize surcharges by Mercury and other insurance carriers that are currently prohibited by law.

The bill also repeals provisions in Prop 103 that prohibit using a driver’s insurance history to determine rates. Now, here’s the rub. The insurance companies say that eliminating these provisions will help save drivers money. But consumer advocates say this will allow insurance providers to raise rates by 40% on millions of Californians.

The big question is, why would a private insurance company spend millions of dollars to save driver’s money? Out of the goodness of their hearts?

No. It’s a great example of horrible government. Because they have money, Mercury is able to buy politicians, lawyers, and deceptive ads that make their mislabeled laws appear to benefit consumers. They’ve also given their committees misleading names, such as "California Insurance Providers for Competitive Prices and Consumer Discounts".

Unfortunately, deliberately deceiving people through misleadingly named legislation is just business as usual in government. The best example? The USA Patriot Act of 2001. Most people don’t know that the full name of the bill is actually "Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism". But the name sounds so darn patriotic, and implies that if you go against it, you aren’t a real American.

With the same grand illusion, the car insurance industry hopes to make the "2012 Auto Insurance Discount Act" look as shiny and consumer friendly as the Patriot Act.

It’s already been suggested that the Occupy Wall Street movement focus on banning political contributions. What better way to start that effort than shining a light on this issue, before another huge corporation buys itself a new law at the average Americans’ expense?