How State Regulations Impact What Travel Insurance Can Be Purchased

by Richard D’Ambrosio
How State Regulations Impact What Travel Insurance Can Be Purchased

The types of travel insurance available for purchase depends greatly on what state travel insurance is purchased in. Photo:

Royal Caribbean and Viking Cruises recently had to temporarily stop selling travel insurance to New Yorkers and residents of several other states because of a conflict with state regulations.

While the two cruise lines were able to resolve the issue and start selling insurance again, what the event demonstrated to consumers and travel agents alike is the crazy patchwork quilt of regulations and filing rules for travel insurance around the U.S.

Travel insurance is regulated by each of the U.S. 50 states for any sales within their state boundaries. This means that to offer coverage nationally, insurers need to file and have approved their coverage with 50 different insurance departments.

New York is cited by many industry experts to be one of the greatest outliers when it comes to anomalies in travel insurance regulations. For example, the state currently prohibits the sale of Cancel for Any Reason (CFAR) insurance. According to the state’s published regulations, a “Cancel for Any Reason Waiver” or “Change of Mind” provision “is not based upon the happening of a fortuitous event,” as defined in the state’s Insurance Law 1101.

Travel Market Report asked a New York Department of Financial Services spokesman to explain the law. They wrote: “Insurance is designed to provide protection against an unforeseen event that occurs by chance or accident over which an affected person has no control. ‘Cancel for any reason’ allows the purchaser to control the event that would lead to payment, which we deem not to be insurance.”

When asked whether the state has ever, or would consider allowing CFAR insurance, the spokesman declined to comment, saying the state doesn’t discuss its regulatory deliberative process.

“I love New York, but it is right there at the king of the mountain, saying, ‘We do it differently,” said Jason Schreier, CEO for APRIL Travel Protection, the Miami-based U.S. division of APRIL Group, a 30-year-old global insurance conglomerate. “It starts with cancel for any reason, but even permeates licensing requirements.”

(New York also is one of a handful of states that hasn’t signed on to a national umbrella model for licensing travel agents to sell travel insurance across all 50 states.)

Travel Market Report contacted numerous travel insurance executives for comment on state regulations and filing procedures. Most declined to be quoted in this story, concerned that their participation would draw unwanted attention to their next state travel insurance filings. “We don’t want to rattle that cage,” said one travel insurance official who asked to remain anonymous.

Many exceptions and anomalies across the U.S.
According to Squaremouth, the online travel insurance aggregator, there are quite a few anomalies where common travel insurance benefits are excluded to state residents. Exclusions typically depend on the underwriter and the lengths they need to go to in specific states in order to offer those benefits.

“Some states make it much harder for providers to offer certain coverages, like CFAR or rental car damage, for instance, and thus they are more likely to be excluded in those states,” though not necessarily prohibited by state regulations, a spokeswoman said.

For example, car rental damage coverage might be excluded in Florida, Kansas, Texas, New York and Washington state, Squaremouth noted, while CFAR might not be found on policies in Florida and New Hampshire – as well as New York. (Squaremouth based its reviews on policies from their top underwriters, Berkshire Hathaway, Generali and Nationwide.)

The terms and conditions for an annual travel insurance plan from Allianz Global Assistance state that rental car damage and theft coverage is not available to Kansas, Texas and New York residents.

In a search on Squaremouth, eight policies appeared for a simple travel insurance request for a one-week trip to Mexico departing Mar. 24, with Cancel for Any Reason coverage for a Washington state resident. Squaremouth said 45 policies were ineligible for purchase. When the state of residence was changed to Pennsylvania, 12 policies were available and 40 policies were ineligible.

“State regulations and statutes vary greatly, and there may be certain coverages that are not available in all states. Conversely some states actually expand coverage over what other states may provide,” said Megan Cruz, CAE, executive director at the US Travel Insurance Association, in Rockville, Maryland.

“I would recommend that someone considering purchasing insurance inquire about any state-specific issues at the time they are contemplating purchasing. If they are not sure, they should contact the company directly,” said Cruz.

The state-by-state process can be time-consuming and costly, and often slows down the national launch of travel insurance products, as was seen in the summer of 2018, when Allianz launched its new SmartBenefits program on Aug. 23.

SmartBenefits was not available for Indiana and Alaska consumers until Aug. 29; Texas consumers until Oct. 9; and Massachusetts residents until Nov. 12. SmartBenefits is still not available to residents of New York and Washington State, but Allianz said in a statement to Travel Market Report that it is “hopeful that it will be available to our customers in those states in the near future.”

Tip of the Day

Something could happen to any of us, the loved ones we travel with, or in this case, to the magnificent marvels put up by those who came before us. So we must travel as far and as often as time and money allow.

Stefanie Katz, The Travel Superhero

Daily Top List

Five Good Reasons to Tell Your Clients About Loyalty Programs

1. Saves money for your clients.

2. Saves time for your corporate clients.

3. Gets all sorts of perks for your clients.

4. Offers enhanced reporting to corporate clients.

5. Provides better service and better client relationships.

Source: TMR.


5 Good Reasons to Tell Your Clients About Travel Loyalty Programs

Loyalty programs, also known as frequent buyer programs, have been around for a long time. But you might be surprised to know that many travelers don’t know about them. Here are five good reasons for travel advisors to spread the word to their customers, both leisure and corporate travelers.

TMR Recommendations
Top Stories
Headquarter Happenings: MAST Travel Network Marks 50 Years
Headquarter Happenings: MAST Travel Network Marks 50 Years

As the industry blossoms, storytelling and one-on-one interactions bring a record number of travel advisors back to their Chicago roots.

Six Mistakes That Could Be Hurting Your Social Media Marketing Strategy
Six Mistakes That Could Be Hurting Your Social Media Marketing Strategy

As you build a social media following, learn how to sidestep the mindsets and actions that can put a damper on your success.

From One Million to Two in Travel Sales: How Advisors Can Jump the Hurdle
From One Million to Two in Travel Sales: How Advisors Can Jump the Hurdle

Research shows that the leap from $1 million to $2 million is among the toughest hurdles for travel advisors. So, take a little while to bask in your glory — and then try these proven ways to move to the next level.

How One Travel Advisor Staked Her Claim on Travel to France
How One Travel Advisor Staked Her Claim on Travel to France

Moving from a generalist to specializing in custom FIT and group trips to France is forcing Isabelle Williams to learn a whole new set of skills.

Going Platinum: Thoughts from Three Travel Advisors Celebrating 20 Years in Business
Going Platinum: Thoughts from Three Travel Advisors Celebrating 20 Years in Business

It was the year of 9/11, when the pundits were saying travel agents were a dying breed. But with over two decades in business, Vicki Briggs, Brenda Punchak and Cheryl Scavron have each proved them wrong.

Divers Need Travel Advisor Expert Guidance
Divers Need Travel Advisor Expert Guidance

The unique nature of diving destinations, and the physical danger clients could experience, make expert travel advisors invaluable. Part two of our two-part series.

News Briefs
TMR Report Cards & Outlooks
Advertiser's Voice
Advertiser's Voice: Tropics and Exotics 2020 -2021 Collection