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Some Regulators Favor Tougher Travel Underwriting Model

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A panel at the National Association of Insurance Commissioners has decided to spend more time working on travel underwriting rules.

Travel underwriting is the practice of using information about consumers’ past travel and future travel plans in decisions about insurance coverage.

Members of the NAIC’s Life Insurance and Annuities Committee voted 6-5 here at the group’s spring meeting to support enforcing proposed travel underwriting rules through routine company examinations, rather than by requiring insurers to file travel underwriting criteria with state insurance regulators.

Julie McPeak, the Kentucky insurance director and chair of the Life and Annuities Committee, broke a 5-5 tie by voting in favor of the change, which would affect proposed amendments to the Unfair Trade Practices Act model law.

The Life and Annuities Committee could send the proposed amendments to the NAIC’s executive committee, but McPeak said she wants her committee to deliberate more on the amendments because she does not feel uncomfortable about advancing them with a tiebreaker vote.

The issue of travel underwriting surfaced in 2005, when a life insurer refused to issue additional coverage to Rep. Debbie Wasserman Schultz, D-Fla., because she said she might visit Israel.

Officials at the NAIC, Kansas City, Mo., have been discussing proposed amendments to the UTPA model that would require insurers to get prior approval from state regulators for any travel underwriting criteria.

David Parsons, who spoke for Alabama, suggested changing the proposed amendments by eliminating the criteria filing requirement.

Singling out travel underwriting and requiring pre-filing of travel underwriting criteria would be redundant, in light of other provisions of the UTPA model, according to the Alabama proposal.

The American Council of Life Insurers, Washington, is supporting the Alabama proposal.

Roberta Meyer, an ACLI vice president, said she has grave concerns about the effect of the original version of the travel underwriting amendments on member insurers.

“Our companies’ view is that it would be an unworkable requirement that would undermine our ability to underwrite fairly,” Meyer said. “I am not aware of any other underwriting statute that requires up-front filing.”

It is not clear what information is to be submitted, what would be done with that information, what the future benefit would be, whether the information provided would remain current, or whether it would slow down the underwriting process, Meyer said.

Before the vote on the Alabama proposal, Florida Insurance Commissioner Kevin McCarty asked committee members to “go for the gold standard and not a compromise.”

After the vote, McCarty said, “No law would be better than the eviscerated one voted on today.”

Birny Birnbaum, executive director of the Center for Economic Justice, Austin, Texas, said “back-end” regulation has failed to identify market conduct problems over the years.


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