Free Car Insurance Promotion Costs Independent Agents

A new sales promotion that provides a year of free MetLife auto insurance coverage to car buyers in the Pacific Northwest is unfairly taking business away from independent agents, according to a regional association that represents those professionals.

General Motors is offering the incentive to Washington and Oregon residents who buy new GM vehicles before Sept. 6. Policies provided by MetLife Auto & Home include both liability and physical damage coverage and exceed requirements in both states.

Under the no-cost offer, consumers with existing MetLife policies get new coverage directly from GM, rather than through an agent, critics say. That means less income for independent agents who are better able to provide consumers with the coverage they require, according to the Professional Insurance Agents Western Alliance.

Clark Sitzes, executive vice president of the alliance, blames MetLife for cutting agents out of the deal. He says member agents have already reported losing clients.

“We just feel that they dumped on these guys,” Sitzes said in a telephone interview Monday.

Washington, Oregon and GM comparisonThe alliance, which represents agents in nine states, has been working with regulators in both Oregon and Washington to get answers to its concerns since the offer was announced earlier this month.

Sitzes said he is satisfied that the offer is legal, but that doesn’t mean it’s right.

“They’re doing it legally—it’s everything else we’re concerned about,” he said.

Independent insurance groups have raised several other questions about the GM/MetLife offer, including how the policies would affect consumers who own more than one vehicle and have existing MetLife coverage and how they would apply to rental vehicles.

The policies give new GM buyers for more than five times the minimum total liability coverage required under Washington and Oregon law and include comprehensive and collision coverage that is not mandated in either state.

They also allow consumers to get car insurance with no down payment, provided they can make the vehicle payments.

Sitzes said he thinks other problems may arise because MetLife will not be using standard rating practices—like analyzing a policyholder’s driving record to forecast future losses—when issuing policies under the deal.

“We don’t know what to expect,” he said.

About Gregor McGavin
Gregor McGavin is an award-winning journalist who has reported across the country for such publications as The Associated Press, the Arizona Republic, the Pittsburgh Tribune-Review and the Press-Enterprise.

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