Travel Health Insurance A Regulatory Perspective Travel Health

Travel Health Insurance: A Regulatory Perspective Travel Health Insurance Association Annual Conference April 11 – 13, 2007

Joanne Abram Chief Executive Officer Warren Martinson Director of Legal and Regulatory Affairs Alberta Insurance Council

Insurance Act and Regulations • In Alberta, travel agents have been permitted to sell travel health insurance policies (once referred to as “travel and baggage insurance”) since 1989. • Since 1997 travel agents sell travel insurance under a “restricted certificate of authority” as do Deposit-taking institutions that sell group travel insurance.

Insurance Act and Regulations • Certificate is issued to the business, variable license fee based on number of salespeople, is not granted on the basis of an exam but is subject to mandatory errors and omissions insurance ($500, 000 per occurrence, $2, 000 aggregate) • Agents holding Accident & Sickness certificates of authority and General Insurance Certificates of authority are also authorized to sell travel insurance.

Insurance Act and Regulations • In May, 2006 the Regulations were amended to provide for a form of insurance adjuster’s certificate of authority restricted to adjusting travel insurance claims. • As of March 19, 2007 there were 400 licensed travel agencies selling travel insurance, 31 restricted adjusters working in 3 Firms and 12 deposit-taking institutions selling group travel.

Travel Insurance Sales • Difficult to determine exact numbers of travel insurance sales as they are generally included in the accident & sickness sales of companies. However, it is safe to say that in 2005 travel insurance premiums exceeded $40 million.

Post-Claim Underwriting, Pre-Existing Conditions and Policy Exclusions • Because of the limited nature of application forms and the absence of exhaustive medical qualification questions, underwriting of travel insurance policies tends to occur only after a claim is made. • This practice exposes consumers to the risk that they do not have coverage when they think they do.

Pre-Existing Conditions and Exclusions • Former cancer patient in remission travels to the U. S. • While there suffers “gastrointestinal” illness and incurs approximately $12, 000 in hospital expenses • Claim initially denied on the basis that condition stemmed from chemo treatment.

Pre-Existing Conditions and Exclusions • Prior to traveling to the U. S. , cancer patient in remission purchases travel insurance and pays increased premium due to pre-existing condition. • Insured suffers relapse while in the U. S. and claim is denied on the basis of the pre -existing condition notwithstanding the fact that insured paid extra premium for coverage.

Pre-Existing Conditions and Exclusions • 72 year old insured purchases policy and travels to the U. S. • While there suffers from gastro-intestinal issues indirectly linked to hiatus hernia. • Insurer declines on the basis that condition is pre -existing. • Additionally the plan the insured purchased states that he is not entitled to coverage if he has suffered from hiatus hernia.

Pre-Existing Conditions and Exclusions • Insured purchases policy that does not offer coverage on conditions that are not stable or where insured has recently sought medical attention. • Insured travels to Arizona and suffers heart attack. Hospital Costs = approx. $163, 000 • Coverage denied on the basis that he recently decreased his heart medication and started taking ginseng.

Pre-Existing Conditions and Exclusions • Insured purchases coverage plan that explicitly states that there will be NO COVERAGE (emphasis found in the application itself) if the individual has suffered from a heart condition in the previous 15 years. • Individual suffered from a heart condition and coverage was denied on an unrelated condition.

Pre-Existing Conditions and Exclusions • 82 year old insured wishes to purchase travel insurance for a 4 month trip abroad. • Agent sells policies that only offer 30 day coverage – So – Agent sells the insured four policies instead of one to presumably cover the entire 4 months of her trip.

Pre-Existing Conditions and Exclusions • 89 year old insured buys policy that excludes “osteoporosis and arthritis” • In purchasing the policy, the insured understood the agent to ask only about “osteoporosis and osteoarthritis”. • While on a cruise she puts on two seasickness patches rather than one and has a drug reaction. Approx. $5, 000 claim denied

Pre-Existing Conditions and Exclusions • Elderly client traveling in the U. S. suffers broken leg and is hospitalized. • Coverage denied on the basis of an unrelated pre-existing condition and contract is voided. • Despite voiding the policy, company attempted to retain the premium by relying on a contractual provision that premium return must be requested within 2 wks.

What do these examples tell us about the travel insurance landscape? What can you do to protect your client, yourself and your business?

Know Your Product • Agents selling travel insurance should undertake a detailed review of their product materials (promotional materials, applications, claims forms, etc). • Know and follow all insurer procedures. • While not required in many jurisdictions to hold a license, Continuing Education on travel insurance may be available and should be sought out. • If you have questions contact us.

Know Your Client • Concept has long been a staple in the investment world. • What features does your client require in an insurance policy? • Does your client exhibit any general or obvious health conditions or concerns as to insurability? • Is your client sophisticated or a business neophyte? Good Communication now prevents complaints later.

File Management • occulto vestri secundum • Where the application form does not have an exhaustive medical questionnaire use contemporaneous notes and file them. • Develop a “Standard Practice” that you follow in relation to all travel insurance interviews.

When things go wrong • Success has many fathers, but failure is an orphan. • Secure your file. • Co-operate with your regulatory body. • Notify your errors & omissions insurer. • Comply with all insurer/agency reporting requirements.

Thank you for your attention and the opportunity to present Questions?