Deceptive travel insurance practices scrutinized by California and Florida

The two states have released statements with regards to sketchy opt-out rules from some companies.

California and Florida have both now issued their own statements with regards to certain selling practices that have been adopted with regards to travel insurance and the opt-out methods that are used extremely regularly.

The states feel that these methods of selling the travel coverage are deceptive and are hoping to promote change.

The first statement was issued by Florida in February, when the state’s Office of Insurance Regulation produced an informal memorandum. Within it, it claimed that online travel agencies that were selling travel insurance by way of opt-out techniques were violating the law in the state. The law in question was Florida’s Unfair Insurance Trade Practices Act. Within the statement that it published, it said that the current method that is commonly used online for selling the coverage directly conflicts with that Act.

Florida stated that this practice of selling travel insurance is not compliant with the “informed consent” requirement of the state’s law.

travel insurance beachThe reason is that by selling the insurance policies in that way, it required consumers to take action in order to decline the coverage, or they would automatically purchase a policy and be charged for it. The “informed consent” terms of the state law do not allow for this method of sale.

The California Department of Insurance released a similar notice in March which pointed out that by selling insurance coverage by way of opt-out practices is in violation of that state’s laws, as well. It said that travel websites that were using opt-out practices to sell the travel policies were not compliant with the disclosure requirements within California.

In the department’s notice, it pointed out that the Insurance Commissioner in the state has the authority to enforce the disclosure requirements in pre-sale practices of travel coverage through the implementation of fines, as well as by suspending – or even revoking – the licenses of limited lines travel insurance who continue to use those illegal selling strategies. This has become an issue that has been placed in the spotlight due to the number of times that this type of policy was sold in an opt-out manner throughout the heavy spring break season.

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