Fresh off a lengthy legal battle, Mercury Insurance Group, one of the state's largest auto insurers, has released a memo to policyholders explaining why it can no longer offer a "portable" persistency discount.  Any insurance carrier that offers a "portable" persistency discount will be affected but how will this change affect you?  Well according to Mercury, some will receive rate increases while others will actually see a rate decrease.  Below is the full text of the letter to Mercury policyholders.

Dear Valued Customer:

You will note a change in your premium.  This change has been mandated by the California Insurance Commissioner.

We have long offered our insureds a persistency discount based on the length of time insured with any insurer.  Prior to 1995, we offered a discount based on years of coverage with Mercury or our agents or brokers.  In 1995, the California Insurance Commissioner determined that persons insured with other insurers represent no greater risk than persons insured with us.  We therefore adopted what has come to be called a "portable" persistency discount.

The California Insurance Commissioner now finds this type of discount unacceptable.  We strongly disagree, but have exhausted all regulatory, legislative, and judicial avenues for getting relief from his decision.

The premiums for some insureds will generally increase moderately; others will receive a premium decrease.  If you have any questions about your changed premium, please contact your insurance producer.

We believe our former methodology is fair.  We anticipate supporting a ballot initiative at the November 2006 general election to authorize insurers to offer this kind of discount.  We hope you will support the initiative.

Sincerely,

George Joseph
Chairman & CEO