Agents Question GM Free Car Insurance Deal With MetLife Auto

Independent insurance agents are raising concerns over a General Motors promotion that offers car buyers in the Pacific Northwest a year of free liability and damage insurance from MetLife Auto & Home.

Hoping to put more drivers in Oregon and Washington behind the wheels of its late model cars, General Motors announced that drivers in these states who take delivery of a new 2010, 2011 or 2012 GM car, truck or crossover before Sept. 6 will receive a year’s coverage from MetLife Auto & Home, a company which does business through independent agents.

This departure by the insurer from the agency distribution system has some agents concerned.

Bob Rusbuldt, Independent Insurance Agents & Brokers of America (IIABA) president and chief executive officer, said the marketing campaign presents a bevy of legal issues, which his group has outlined to the insurer.

“We have raised licensing and regulatory concerns, along with important consumer issues,” Rusbuldt said. “MetLife Auto & Home has been open to our concerns and is seriously reviewing them.”

John Timm, president of the Independent Agents and Brokers of Oregon, said GM’s promotion under MetLife’s In the Car program raises “a lot of questions” for consumers.

“There are a lot of unknowns; it’s a very vague offer,” said Timm, president of Timmco Insurance Inc. of Portland. “It’s doubtful that consumers will be well served.”

The promotion was green-lighted by the two states’ insurance regulators.

“We looked at the product thoroughly, and it’s our determination that this product is allowed by law,” spokesman Rich Roesler of the Washington insurance department said.

Some producers, he added, have raised concerns that GM is acting as an insurance agent and asked if the program violates the state law against rebating. “In our determination, this is a group policy with GM holding the master policy,” Roesler said.

In Oregon, approval came from the Insurance Administrator Teresa Miller. Spokeswoman Cheryl Martinis said the insurance department, in March, “took a close look at it and in the end, we found it was OK.”

The MetLife Auto coverage comes with the purchase of new GM models from the Chevrolet, Buick, GMC or Cadillac lineups. The policies cover liability and physical damage, above the states’ required minimum standard, according to GM. The policy also covers anyone who drives the car with the owner’s permission, as long as the original purchaser continues to own or lease the vehicle.

Policies have separate $500 deductibles for collision and non-collision coverage. GM’s offer is not available on cars used for commercial or fleet.

The coverage will be issued to “all eligible purchasers of qualifying automobiles who are licensed residents of Oregon or Washington,” GM’s terms state.

Rates under the program are based on the vehicle’s make, value, horsepower and other factors, said Cece Newell, the Oregon Insurance Division’s property/ casualty analyst. “It’s contrary to standard rating practice,” she said.

Under the MetLife policy, if a new car is damaged beyond repair within the car’s first year or first 15,000 miles, whichever comes first, the company will repair or replace the vehicle with a new vehicle, without deducting for depreciation.

Offered through Sept. 6, the coverage “at no additional cost” is part of a GM marketing test in two states where the Detroit-based automaker said it has not met its goals for market-share growth.

MetLife proposed the program in a regulatory filing in February, Newell said, noting that the GM-MetLife program is like no other insurance program she has seen. “There were some serious considerations,” she said. “What we have to work with is what the law says, and there is nothing in the law to keep people from being innovative.”

Met Life Defends Program

Despite the questions by some agents, the insurer told Insurance Journal it is sticking with the GM deal for now.

MetLife Auto & Home says it sees its direct marketing arrangement with GM as a way to increase its brand recognition, which it says should also help its independent agency distribution force.

“Almost since its founding, MetLife Auto & Home has been known as a company utilizing multi-channel sales, so that we can sell policies to prospective customers in the way they want to buy them, and we remain committed to all our sales partners, both agents and employee benefit sales,” said company spokesman David Hammarstršm.

“Increased brand recognition for MetLife Auto & Home is a positive for our company and our salesforce, as further customer awareness of the company and its value proposition will continue to drive sales through all distribution channels.”