As we reported to you a few days ago, in an innovative sales move, GM has begun offering one year’s free insurance to new car buyers across its entire range in Oregon and Washington. Customers seem to be happy about the new plan, but just about every other company who sells insurance is making a lot of noise.
The rationale behind the complaints, PIA Western Alliance (a trade group of insurance agents from nine Western states) says, is that “the program is an incentive that takes income away from independent insurance agents.” According to insurance law in many states, it is not legal to offer incentives to insurance policy buyers.
However, according to the state Insurance Boards in both Washington and Oregon, the offer does not constitute an incentive. GM are effectively buying a policy from MetLife, and enrolling their customers in this group policy on their behalf. Any rationale that prevented this would also make it illegal for companies to pay for their employees’ insurance, or for parents to ensure their children’s vehicles under their own policies.
GM Offering Attractive Policy
Not only is the insurance policy offered by GM free for the first year, it is also quite an attractive policy. It covers damage and liability above the minimum levels of cover required by state law, and it also includes a vehicle buyback clause that states that if your vehicle is stolen or damaged within the first year of ownership or 15,000 miles, the insurance policy will pay out the full value of the vehicle without accounting for depreciation.
This makes it preferable to many of the lower cost insurance policies available in Washington and Oregon by far.
Independent Agents Unhappy
Naturally, other agents who sell insurance in the area are unhappy about this, who claim that it is violating the spirit of the law, if not the letter. PIA Western Alliance says that insurance should not be able to be bundled with a vehicle like floor mats or parking assist. The plan, they say, is putting smaller agents and brokers out of pocket, and could spell serious trouble for an already embattled industry.
GM Hoping to Revive Flagging Sales
GM commented that Washington and Oregon have traditionally been weak markets for them, and their vehicles have done particularly badly on the sales floor there as they have been overtaken by German and Japanese models. They say that there is not yet enough data to tell whether or not the plan is working, but they have been able to say that very few customers decline the free insurance.
There are already moves being put in place to roll the program out in other states, and MetLife is standing by its decision to provide this cover to GM customers.
MetLife Promoting Teen Safety on the Roads
In addition to partnering with GM to offer free insurance to new vehicle buyers, MetLife has also rolled out an innovative scheme to help teen drivers pay for insurance, and to help teach them safer driving habits from an early age. The company is offering a free $50 rebate card if they complete 20 weekly trips with their parent or guardian, and fill out a log of these trips. They are also extending the offer by $50 for the following year if they drive for a year without encountering an accident.
The company says “We hope this new program helps teens learn good driving habits for life. If we can prevent just one teen death, it will be well worth the effort”.