the US has been the denial or limitation of cover by some insurers
to people who plan to travel to countries in what are deemed to be
high-risk regions. The issue has now come to a head with the filing
of a complaint by the Florida Office of Insurance Regulation (FOIR)
against American General Life Insurance (AGLI), a unit of American
International Group.
In a release the Florida Insurance Commissioner, Kevin McCarty,
explained that his office is seeking to suspend or revoke AGLI’s
certificate of authority to write insurance policies in Florida and
require the insurer to end unfair trade practices as defined in the
Freedom to Travel Act. In its complaint the Florida regulatory body
cites multiple counts of AGLI “refusing to provide policies or
limiting the amount, extent or kind of life insurance based solely
on the individual’s future lawful travel plans”.
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The Florida regulatory body pointed to a high-profile incident that
involved Congressional representative Debbie Wasserman Schultz. In
2005 her application to AGLI to increase her life insurance cover
was rejected because she had indicated that though she had no firm
plans she might at some time in the future travel to Israel. The
denial letter from AGLI invited her to reapply upon her return from
Israel. “Our legal travel choices should not adversely impact our
ability to purchase life insurance,” stated Wasserman Schultz in
the FOIR release.
Commenting on the FOIR complaint, its legal representative, Steve
Parton, stressed: “Seeking to suspend a company’s licence is not
something we take lightly; however, given that these actions are in
clear violation of the law, the Office is left with little choice.
The Office has warned American General in the past, but they have
refused to change their practices.”
Meanwhile, in March this year New Jersey joined Florida and other
US states to have passed legislation prohibiting life insurers from
unfairly discriminating against individuals based on their past or
future foreign travel plans. Commenting on the legislation, its
sponsor Assemblyman, Neil M Cohen, said: “Detrimentally altering
people’s life insurance coverage because of their foreign travel
plans is an intolerable insurance underwriting practice. A person’s
legitimate travel lifestyle must never be exploited by insurance
companies as a new avenue for financial gains.”
Other states with legislation similar to New Jersey’s and Florida
are Connecticut, Colorado, Maryland, New York, Washington,
Illinois, and California.
The flurry of action around the travel discrimination issue has
prompted insurance regulatory body The National Association of
Insurance Commissioners (NAIC) to take action. In late March this
year the NAIC announced that its Annuities (A) Committee had
unanimously adopted revisions to the Unfair Trade Practices Model
Act that would “limit an insurer’s ability to refuse life insurance
because of lawful past travel or, under certain circumstances,
lawful future travel”.
Specifically, explained the NAIC, future travel cannot be the basis
for a coverage decision unless travel to a specific destination at
a specific time is found, based on sound actuarial principles and
actual or anticipated experience, to create a risk of loss greater
than that for individuals who do not travel to that place at that
time.
However, continued the NAIC, travel to a destination where the US
Center for Disease Control and Prevention has issued an alert or
warning or where there is an ongoing armed conflict involving a
foreign army are deemed to be valid bases for refusing to offer or
limiting coverage.
The revisions proposed by the Annuities (A) Committee await final
approval by the NAIC’s Executive Committee and Plenary.
