Mercury Casulaty Co. v. Jones

by
This appeal stemmed from an application Mercury Casualty Co. (Mercury) filed in 2009 to increase its homeowners’ insurance rates. In denying the increase Mercury requested, the California Insurance Commissioner (the commissioner) made two decisions at issue on appeal. The commissioner determined: (1) under subdivision (f) of section 2644.10 of title 10 of the California Code of Regulations, Mercury’s entire advertising budget had to be excluded from the calculation of the maximum permitted earned premium because “Mercury[] aims its entire advertising budget at promoting the Mercury Group as whole” rather than “seek[ing] to obtain business for a specific insurer and also provid[ing] customers with pertinent information” about that specific insurer; (2) Mercury did not qualify for a variance from the maximum permitted earned premium under subdivision (f)(9) of section 2644.27 because “Mercury failed to demonstrate the rate decrease [that resulted from application of the regulatory formula] results in deep financial hardship.” Mercury and certain insurance trade organizations ("the Trades") unsuccessfully sought to challenge the commissioner’s decision in the superior court. On appeal, Mercury and the Trades raised three main issues: (1) the commissioner and the superior court erred in interpreting and applying section 2644.10(f) with regard to what constitutes institutional advertising expenses; (2) the Trades contended section 2644.10(f) violated the First Amendment to the United States Constitution because the regulation imposed a content-based financial penalty on speech; and (3) Mercury and the Trades contended the commissioner and the superior court erred in determining that Mercury did not qualify for the constitutional variance because the commissioner and the court wrongfully applied a “deep financial hardship” standard instead of a “fair return” standard. Finding no merit in these arguments, or any of the other arguments offered to overturn the judgment, the Court of Appeal affirmed. View "Mercury Casulaty Co. v. Jones" on Justia Law