Talking car insurance with Mercury’s top man

I spent nearly two hours last Friday in the office of Mercury Insurance Chairman George Joseph. He seemed like a nice guy, but half an hour into it, my head was spinning.

Joseph was explaining why he’s bankrolling Proposition 17, which could affect the insurance premiums paid by millions of Californians. But by the second or third reference to industry terms like “portable persistency,” he might as well have been pulling out my fingernails with pliers.

“You can’t debate it in the newspaper,” Joseph said, conceding that insurance can be dry and complicated stuff.

If you can’t make sense of it in the newspaper, what can we expect from the 30-second TV spots we’ll be assaulted with leading up to the June election?

Joseph told me he had been advised by underlings not to grant my interview request. Not only did he ignore them, he personally met me in the lobby of his building. Joseph, who’s in his 80s but works like a man in his 20s, knew I was a Mercury customer who was thinking of bailing on the company.

“We’d like to keep you if we can,” he said.

My dilemma, as I wrote in last week’s column, is that Mercury’s got low rates but, on occasion, bad press. Mercury has “a lengthy history of serious misconduct,” the state Department of Insurance said recently, including an attitude of “contempt toward and/or abuse of its customers.”

In Wednesday’s column, I too beat up on Mercury for a state investigation that led to a $300,000 fine for seven infractions. But I wronged Joseph by suggesting Prop. 17 would legalize one of the practices for which Mercury was fined: The state had made that accusation but ultimately dropped the charge.

Joseph’s goal was to set me straight on Prop. 17, and he directed me to a knee-high table stacked with reams of documents. Chairs around the table were adjusted low to the ground, as if Joseph has teams of leprechauns on the payroll. It turns out he simply likes being knee deep in paper, and he kept diving in to pull out reports backing his argument.

Prop. 17, he said, is nothing more than an effort to offer lower car insurance rates to Californians. Currently, you can get a loyalty discount for having continuous coverage with one company. Prop. 17 would give you the right to switch from one company to another and still get continuous coverage discount.

Joseph, who started

with nothing 50 years ago and turned Mercury into a powerhouse -- becoming one of the state’s richest men in the process -- readily acknowledges his true motive. He wants more customers, and if discounts become portable, he’s convinced drivers will drop other companies and switch to Mercury because of its cheap rates. And those would be the lowest-risk drivers, statistically speaking, so Joseph stands to benefit handsomely, or he probably wouldn’t be spending millions to promote Prop. 17.

There is nothing wrong with any of that. It’s the American way, and with decades of hard work -- and millions of dollars in political donations -- George Joseph has all but mastered the American way.

But the ballot argument against Prop. 17, written by Consumer Watchdog, a longtime Mercury Insurance adversary, warns voters not to be fooled.

“Can I read this to you?” I asked Joseph.

He sat calmly as I read the denunciation of 17:

It’s a deceptive scheme because while it would lower rates for some, others would get hit with big surcharges. Military personnel and others who temporarily discontinue coverage because of transfers or other factors would be penalized. The number of uninsured drivers would skyrocket.

Joseph, who’s pretty agile, couldn’t take it after a while. He jumped up and was dashing across his office before I finished.

“I could take that apart, one by one,” he said, retrieving more documents.

The argument against isn’t exactly a pack of lies, Joseph said, but it’s misleading and inaccurate. Yes, some people will pay more than others if 17 passes, he said. But that’s the way it is now, and the primary difference under 17 would be that more drivers would have a chance to get discounts.

In the days since my meeting, I’ve had multiple conversations with Joseph, reps of Consumer Watchdog and others with dogs in this fight. Nobody is backing down.

Consumer Watchdog insists Prop. 17 would, in effect, legalize surcharges that were made illegal by 1988’s Prop. 103, adding yet another way to discriminate against those who don’t fit the insurance industry’s profile of the perfect driver. One result, they argue, would be more uninsured drivers on the road at great cost to everyone.

All bunk, said Joseph, who repeated his argument that Prop. 17 is not about raising rates, it’s about lowering them.

I asked Bob Hunter of the Consumer Federation of America to weigh in.

“The law says you can’t use a lapse in coverage against” consumers, said Hunter. Mercury wants “to get that lapse back in.”

And what will happen if 17 passes?

A majority of drivers would “probably get some small reduction,” he said. Others could get “a very large increase.”

How can Hunter be sure?

“I’m an actuary,” he said. “I do this for a living.”

So will George Joseph keep me as a customer?

Not sure yet. I’m going to see how honest Prop. 17’s ad campaign looks, and then decide whether I can trust the man behind it.

steve.lopez@latimes.com