As Auto Insurance Changes Approach, Massachusetts Insurers Add Perks

By Sarah Shemkus, Cape Cod Times, Hyannis, Mass.

Nov. 2--With managed competition in auto insurance just weeks away from becoming a reality in Massachusetts, some companies have already started adding new services to their policies to help attract and retain customers.

"We are already seeing competition; we are already seeing new products," state insurance Commissioner Nonnie Burnes said this week at a meeting of the Property Casualty Insurers Association of America in Boston.

"It's a way of binding their customers to them."

Traditionally, Massachusetts' auto insurance system has limited what products insurance companies could offer and how much they could charge.

These restrictions have been blamed for the fact that only 19 companies now offer auto insurance in the state.

This year, however, Burnes introduced regulations that will open up the market to competitive rates and products. It is hoped this will attract new insurers to the state.

Though consumer advocates have been skeptical about the benefits of competition, state officials are optimistic.

"We're confident that good drivers everywhere will benefit from lower rates, better services, and more choice under managed competition," said Division of Insurance spokeswoman Kim Haberlin.

Insurance companies that already write auto policies in the state are beginning to take advantage of the pending changes.

Liberty Mutual announced yesterday that, as of Jan. 1, 2008, all new and renewed auto policies in Massachusetts will include, at no added cost, four benefits previously unavailable in the state.

Insurance policies offered under the managed competition system are scheduled to become available April 1, 2008. Companies intending to offer competitive products on that date must file their rates with the state Division of Insurance by Nov. 19.

"We're giving our existing customers and customers that come on before April 1 a head start on receiving some of those benefits," said Liberty Mutual spokesman Glenn Greenberg.

With these additional features, policyholders will be able to receive the full replacement cost of a new car that is totaled in an accident or stolen within a year or 15,000 miles after purchase. Currently, the car's value would quickly depreciate and a policyholder could end up receiving less than it would cost to replace the vehicle.

The new package will also enhance rental car insurance, expand towing coverage and offer full replacement cost for certain mechanical parts damaged in an accident.

"This is what competition is all about," said Greenberg, calling the new benefit package one of the first innovations in Massachusetts auto insurance policies in decades.

MetLife Auto & Home last week announced that it has added complimentary identity theft resolution services to the auto policies of 200,000 Massachusetts customers.

The company already offered this protection in 48 states, said director of product management Matt Cullina.

The added service has received "overwhelmingly positive response" from customers, he said.

MetLife is also hoping to file additional enhancements with the state over the next month, which could add features similar to the ones that Liberty Mutual just introduced, Cullina said.

These benefits would be offered at no additional cost as a way to distinguish MetLife auto insurance as the Massachusetts market becomes more competitive.

"We really strive to be different in the marketplace, and we do it with product differentiation," Cullina said.

Though he could not guarantee that these new features would be approved, he said that the company has "gotten some indications that there's promise."

Another company positioning itself for success in the state's impending competitive market is Travelers, whose subsidiary Premier Insurance currently offers auto coverage here.

Earlier this month, Travelers announced that Premier would be renamed Travelers of Massachusetts in order to take advantage of the parent company's positive brand image and high level of name recognition.

The move to managed competition was the catalyst for the change, said Susan Scott, senior vice president and general counsel with Travelers.

"I believe that with the more generally recognized name it will help us compete in the more aggressively competitive market," Scott said.

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