California Court Says Commissioner Can Prohibit Pass Thru of Advertising Costs

February 13, 2017

A California Court of Appeal had decided in favor of California Insurance Commissioner Dave Jones in a case against Mercury Insurance Co. and a coalition of insurance industry groups, which sued Jones to challenge his authority regarding “institutional” or “brand” advertising expenses as well as the commissioner’s order reducing Mercury’s homeowners’ insurance rates by 5.4 percent.

The court rejected the insurers’ challenge and ruled in favor of Jones on both issues.

Jones prohibited Mercury from passing on $2.8 million in brand advertising costs to consumers because he said the advertising did not give them meaningful information about the insurance products sold by the insurer. The court upheld the commissioner’s decision to prohibit insurers from passing along to consumers the cost of brand advertising, including advertising at sporting events and venue sponsorships.

California Insurance Commissioner Dave Jones

The insurance companies also challenged the commissioner’s order to reduce Mercury’s homeowners’ rates as unconstitutional. The court rejected the insurers’ argument and upheld the commissioner’s order to reduce Mercury’s homeowner rates by 5.4 percent.

“Insurers spend millions of dollars on brand advertising which provides zero benefit to consumers, including paying tens of millions for stadium and arena naming rights and sponsorships of tournaments and other sporting events,” Jones said in a statement. “The appellate court rejected the insurers’ legal challenge and affirmed my authority to stop insurers from passing along to consumers brand advertising costs, such as expenses for sports stadium naming rights, sponsoring sporting events, or advertising the name of the insurance companies on a blimp.”

Was this article valuable?

Here are more articles you may enjoy.

Latest Comments

  • February 16, 2017 at 11:31 am
    KP says:
    Have you seen Mercury's commercials, they're terrible.
  • February 15, 2017 at 11:32 am
    Observor says:
    Mr. Landini makes a valid point. CEOs have to inform the public that they exist. They balance that cost with the challenges of remaining competitive in the market as well as t... read more
  • February 14, 2017 at 6:01 pm
    George Lee says:
    Lou is full of poo! No, that's not the way it's done. Rates are generally based on loss experience, not whether the insurance company overspent their advertising budget. That'... read more

Add a CommentSee All Comments (4)Add a Comment

Your email address will not be published. Required fields are marked *


More News
More News Features