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Free Auto Insurance Promotion is Legal, State Regulators Say

Regulators in Washington and Oregon say they have received complaints from independent agents about a controversial sales promotion that equips General Motors vehicles with a new standard feature: A year’s worth of free coverage.

“It’s not a groundswell, but folks are clearly concerned about it,” Rich Roesler, a spokesman for the Washington State Office of the Insurance Commissioner, said in a telephone interview Wednesday.

Officials in both states said they have analyzed the terms of the promotion—under which Pacific Northwest residents who buy a new GM through Sept. 6 are automatically covered by an annual MetLife Auto & Home policy—and found everything to be completely legal.

Under the trial offer, consumers can buy a GM truck, car or crossover and be covered before they drive off the lot. There are no agents involved in the process, and buyers are advised to contact MetLife with any policy questions.

Officials with GM and MetLife say the free policies are a good deal for car buyers, who do not have to seek out car insurance recommendations or spend time looking for policies.

But the offer has been by criticized independent agents’ associations, which say that it provides consumers with inadequate policy advice and removes their members from the buying process.

The groups have raised numerous questions about the offer, including how no-cost coverage would affect people who have existing “umbrella” policies from other providers that cover multiple cars and their homes.

Cece Newell, a property and casualty technician with Oregon’s insurance division, said she has gotten a half-dozen calls from individual agents and last week responded in writing to a series of detailed questions submitted by the Independent Insurance Agents and Brokers of Oregon.

Newell said she understands the concerns about the GM/MetLife incentive.

“If you think like an insurance agent, this steps out of the norm and it’s very hard to see how it could possibly be OK,” she said in a phone interview.

Roesler estimated that his office has fielded complaints from as many as 20 agents about the sales promotion. He said the deal will be discussed at the fall meeting of an advisory committee that includes coverage providers, he said.

One contentious part of the offer has been the absence of the use of standard underwriting criteria, such as driving record, age and gender. MetLife officials have said that they are not reviewing that information prior to issuing policies.

But Roesler said those criteria are being taken into account in Washington, and GM will have to pay the difference in premiums for any drivers with spotty records.

“If the buyer is a poor risk, then GM will pay more for that coverage,” he said.

For policies issued to Oregon residents through the program, the average annual premium is set to be $1,178, according to the rate filing MetLife submitted to regulators.

 

 

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