Why Mercury Insurance Stands Out as an Exception

Since 2019, insurance companies have consistently approached the California Department of Insurance (DOI), seeking permission to adjust their rates upward in response to evolving market conditions. However, the DOI’s stringent regulatory stance prevented these adjustments, leading to a pronounced imbalance within the insurance sector. This regulatory rigidity resulted in financial distress for many insurers, as evidenced by their deteriorating balance sheets.

The onset of the COVID-19 pandemic and subsequent lockdowns momentarily altered the landscape. With significantly fewer vehicles on the roads, insurance companies experienced a temporary surge in profitability. However, this was a fleeting reprieve in an otherwise declining trend in profitability. In a move to ensure fairness, the DOI mandated insurers to issue rebates or returns on premiums to their customers, with Mercury Insurance proactively doing so even before the DOI’s intervention.

As the pandemic restrictions lifted and normalcy began to return, the insurance industry faced renewed challenges. An increase in road traffic, coupled with supply chain disruptions and a significant rise in used vehicle prices, swiftly negated the temporary gains. Insurers once again found themselves in a financial quagmire, prompting them to request rate increases from the DOI. Despite these requests, the DOI remained hesitant to approve significant rate adjustments until 2023, when the cumulative pressure from major insurers suspending new business in the state catalyzed a change in stance.

However, the rate increases approved by the DOI fell short of the industry’s needs, leading to further market exits and business suspensions. Mercury Insurance stands out as an exception, having continuously accepted new business throughout this turbulent period. In 2023, Mercury received approval for modest rate increases, though these were not sufficient to fully address the financial challenges. The DOI is now beginning to recognize the necessity of more substantial rate adjustments to ensure insurers can continue serving California’s residents.

Mercury, having remained operational and committed to its clientele throughout, is among the first to benefit from this shift in regulatory approach. As other insurers receive the necessary approvals to resume operations, it is anticipated that their rates will likely exceed those of Mercury, which has historically offered premiums that are 5%-15% lower than its competitors. Mercury remains dedicated to maintaining this competitive edge, underscoring its commitment to the people of California.

Supporting articles:

Why choose Mercury for your Auto Insurance?

A.M. Best Company Rating: Mercury Insurance