Case Study: Mercury Casualty Co. Vs. California

California’s Proposition 103—which allows California’s insurance commissioner to give the final OK on insurers’ rates in the state—lives to see another day. Although its days may be numbered, said the current insurance commissioner.
The Third Appellate District Court affirmed a lower’s court ruling that Mercury Casualty Co.’s advertising expenses can be excluded from the commissioner’s calculation of Mercury’s California premiums and that the lower rate doesn’t create a “deep financial hardship.” The California Supreme Court declined to hear Mercury’s appeal of the appellate court’s ruling.
According to the Third Appellate District Court’s opinion, in 2009 Mercury Casualty filed a request to increase its homeowners’ insurance rates in California. The California insurance commissioner denied its request.
In 2013, Mercury filed a
On appeal, a collective of insurance trade organizations also argued that excluding institutional advertising expenses from the California insurance premium rate formula violates their First Amendment right “by imposing a content-based penalty on speech.”
In addressing the First Amendment question, the appellate court said two questions had to be raised: If section 2644.10(f) imposes a content-based burden on Mercury’s speech and if the section also included only commercial speech or—as the insurance organizations argued--both commercial and noncommercial speech. The court found on appeal that the section doesn’t ”ban insurers like Mercury from engaging in advertising that does not directly benefit consumers ... Instead, the regulation simply prohibits the insurer from passing the cost of such advertisements on to the