Auto insurers readying their deals

Some Massachusetts automobile insurers are starting to gear up for competition, offering new policy benefits at no extra cost, adopting more recognizable names, and promising their agents competitive pricing.

Liberty Mutual Group of Boston and MetLife Auto and Home of Warwick, R.I., have both won approval from the Division of Insurance for enhancements to their existing policy benefits, which they plan to add at no extra cost to the customer. Both companies said the state's decision to move to auto insurance competition next year precipitated their filings.

The moves show that insurers are starting to distinguish themselves from rivals as Massachusetts prepares to introduce auto insurance competition for the first time in 30 years. To be sure, the full impact of competition won't be known until Nov. 19, when insurers are scheduled to file their rate plans for next year for customers who start renewing their policies after April 1. Customers may see even more insurers jumping into the fray, slashing rates and offering beefed-up policies.

"This is a sneak peak of what's coming," said Glenn Greenberg, a Liberty spokesman. "Until now, there was no incentive for insurers to innovate their products."

Starting Jan. 1, Liberty will begin offering its 200,000 customers who have collision coverage better car replacement and rental car coverage. Currently, Liberty offers a Massachusetts customer whose new car is totaled or stolen the depreciated value of the vehicle minus the customer's deductible.

The newly approved coverage matches what Liberty offers in most other states - full replacement value minus any deductible for a new car that's stolen or totaled. The difference between the old and new coverage could be hundreds of dollars depending on the vehicle. Liberty defines a new car as one that is less than a year old and has less than 15,000 miles on the odometer. For an older car, Liberty offers depreciated value of the vehicle minus the deductible.

Liberty is also lifting its 30-day limit on rental car coverage while a motorist's car is being repaired and tweaking towing and parts replacement coverages to make them more generous.

For its part, MetLife has already added, at no extra charge, an identity theft resolution service to the policies of its 200,000 Massachusetts customers. The service directs customers who suspect something amiss with their credit to a company called Identity Theft 911, which will help them deal with the problem.

State Insurance Commissioner Nonnie S. Burnes said she expects companies to offer all sorts of new products at different prices when they unveil their plans on Nov. 19, but she said some companies are trying to signal to their customers now that the environment is changing.

"It looks to me like they are wanting to keep their customers and this is a way of giving those customers something additional so they'll stay with them," Burnes said.

For 30 years, Massachusetts regulators have set all of the state's automobile insurance rates and mandated one standard policy for all customers.

Now, the state is pushing ahead with "managed competition," where insurers will set their own rates and design their own policies, subject to regulatory approval.

The changes have attracted the attention of some big national carriers, including State Farm Mutual Insurance Co. and Progressive Insurance. No company has announced plans to enter the market yet. But the 19 companies that are currently operating in Massachusetts are becoming more active, launching advertising campaigns, tweaking their coverages, and in one instance changing the name it uses to interact with customers.

Fourteen years ago, when many insurers were fleeing Massachusetts, Travelers Corp. created Premier to handle its automobile policies here because the state "was seen as such a challenging market," according to Susan K. Scott, Premier's general counsel. But now that Massachusetts is opening its market to competition, Premier has decided to start operating under the Travelers brand name. Scott said market research, including focus groups with customers and agents, found that the Travelers name resonated more with customers than the Premier name.

Automobile insurers also are reassuring their agents, who are likely to be wooed by many companies once competition begins, that they are ready for it. Arbella Mutual Insurance Co. of Quincy, which has opposed most efforts to revamp the state's auto insurance system, said in a letter to its agents earlier this week that it welcomes competition.

In the letter, Arbella chief executive John Donohue promised innovative products, extensive marketing and "aggressive auto discounts to make our products more attractive to customers and prospects, plus additional discounts for those with Arbella home and auto" policies.

Donohue said Arbella planned to contact customers directly to urge them to contact their agent to discuss discount information. "We think it's never too early to start a productive dialogue that will keep you out ahead of the competition and help you retain your best customers," Donohue said.

Bruce Mohl can be reached at mohl@globe.com.