NAIC Adopts Changes to Unfair Trade Practices Model Act Regarding Travel Insurance Discrimination

The National Association of Insurance Commissioners’ (“NAIC”) Life Insurance and Annuities Committee 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.

The proposed revisions now advance to the NAIC Executive Committee and Plenary for final approval.

A copy of the NAIC press release is reprinted below.

To view reports on recent Florida regulatory actions regarding the rights of consumers to travel abroad, click here and here.

To view a Florida Office of Insurance Regulation (“OIR”) history of the issue, which includes the OIR 2008 Report on Life Insurance Limitations on Freedom to Travel, click here.

Subsequently, after receiving multiple petitions for variance and waiver regarding Rule 69O-125.003: Unfair Discrimination Because of Travel Plans, the OIR issued a variance on February 15, 2008 permitting insurers to factor travel plans to Iraq and Afghanistan in their underwriting. To access information on the variance, click here.

Should you have any questions or comments, please do not hesitate to contact this office.

 

NAIC Protects Insurance Rights of Consumers Who Travel Abroad

ORLANDO, Fla. (March 31, 2008) — The National Association of Insurance Commissioners (NAIC) took an important step toward protecting insurance consumers from discriminatory underwriting practices in the sale of life insurance.

The NAIC’s Life Insurance and Annuities (A) Committee 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, 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.

Travel to a destination where the U.S. Centers for Disease Control and Prevention has issued an alert or warning or where there is an ongoing armed conflict involving a foreign army is deemed a valid basis for refusing to offer or limiting coverage.

“When adopted, this proposal will protect Americans’ right to travel without losing important life insurance protection,” said New York State Insurance Superintendent Eric Dinallo, chair of the committee. “I am proud that we were able to reach this agreement so quickly. I would like to thank the industry and consumer groups, as well as state and NAIC staff. I’d especially like to recognize Florida Commissioner Kevin McCarty and committee vice chair, Wisconsin Commissioner Sean Dilweg, for their exceptional contribution to this agreement.”

The issue gained awareness in 2005 when U.S. Rep. Debbie Wasserman Schultz (D-Fla.) was denied life insurance due solely to potential travel to Israel. The denial letter invited her to re-apply for life insurance upon her return. Florida Insurance Commissioner Kevin McCarty presented the issue to the NAIC and it became part of the committee’s charges in 2006.

“I am pleased that the committee has addressed this important issue and is moving forward with an initiative,” McCarty said. “This will help protect the right of all citizens to travel freely without worry about how future travel plans might affect their ability to purchase life insurance.”

The proposed revisions now advance to Executive (EX) Committee and Plenary for final approval.

 

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