State targets insurer over travel-related rejections

Mar 20, 2008

Palm Beach Post--Mar. 20, 2008
Palm Beach Post Staff Writer

The state said Wednesday it will seek to revoke or suspend the license of a life insurance company it accuses of denying or limiting coverage to international travelers.

AIG American General Life Insurance Co., a division of New York-based American International Group Inc., has been charged with multiple violations of Florida’s Freedom to Travel Act, according to the Office of Insurance Regulation’s administrative complaint. The law, enacted in 2006, prohibits insurers from rejecting or capping coverage based on a policyholder’s travel plans.

”When assessing their life insurance needs, consumers should not have to worry about how their travel plans might affect their ability to get insurance,” said Steve Parton, general counsel for the regulation office.

The legislature passed the Freedom to Travel Act after U.S. Rep. Debbie Wasserman Schultz, D-Pembroke Pines, attempted to increase her coverage from American General. On her application, the congresswoman indicated she was planning to travel outside the United States.

An American General representative later called and spoke with Wasserman Schultz’s husband, who indicated that his wife might travel to Israel. The company declined to increase her coverage, citing the Israel trip.

"As Americans, the ability to travel freely is a right we cherish,” Wasserman Schultz said Wednesday. ”Our legal travel choices should not adversely impact our ability to purchase life insurance."

Michael Arcaro, a spokesman for AIG, said American General has tried to comply with the Freedom to Travel Act.

”We have put in place policies, procedures and controls to ensure compliance with this and other applicable regulations, and we are continually looking for ways to enhance those measures,” Arcaro said.

The insurer, which has less than 1 percent of Florida’s insurance market, has 21 days to respond to the complaint.

The complaint cites six cases between July 2006 and October 2007 in which regulators say American General denied coverage, reduced the amount offered or said it would charge a higher fee for travelers planning to travel internationally. Colombia, Tanzania and Qatar were among the countries on the travelers’ itineraries. Officials say they obtained their evidence by examining AIG records during four visits to the insurer in 2006 and 2007.

Insurance regulators fined American General $7,500 in March 2007 for one violation of the law the year before.

Parton, of the insurance office, said this isn’t the first time American General has come under state scrutiny.

"The office has warned American General in the past, but they have refused to change their practices," he said.