The American Council of Life Insurers is keeping close watch on a section in the new Terrorism Risk Insurance Act extension bill that could limit use of intended travel destination as a life insurance underwriting criterion.
Section 11 of the TRIA extension bill, H.R. 2671, concerns “mandatory availability of life insurance that does not preclude future lawful travel.”
The section would restrict use of travel underwriting, but the current version would permit insurers to charge extra for insureds who intend to travel to certain destinations if the extra charges were reasonable and based on a good-faith actuarial analysis.
The provision also would permit insurers to deny applications for coverage based on travel if federal agencies had ruled such travel to be dangerous because of health risks or because of an ongoing military conflict.
The provision would not pre-empt travel underwriting laws that already are in effect in California, Colorado, Connecticut, Florida, Illinois, Maryland, Massachusetts, New York and Washington.
Rep. Debbie Wasserman-Schultz, D-Fla., the author of the provision, says she is working with Sen. Charles Schumer, D-N.Y., a member of the Senate Banking Committee, to have the measure introduced as a free-standing bill in the Senate.
But Wasserman-Schultz says she believes the provision also fits well in the TRIA extension bill.
“My argument has always been that if you allow headlines to dictate American business practices, then the terrorists win,” Wasserman-Schultz said. “That is why the TRIA bill is an appropriate place to put this.”
According to several industry lobbyists and lawyers, Rep. Barney Frank, D-Mass, chairman of the House Financial Services Committee, stepped in to help broker a compromise after talks between life insurance industry officials and Wasserman-Schultz broke down about 2 weeks ago.
“This has been a contentious subject in the states and Congress over the past 2 years,” ACLI President Frank Keating says in a statement about the Wasserman-Schultz travel underwriting provision. “We’re pleased with Chairman Frank’s leadership in finding middle ground on this issue.”
As now written, “the provision preserves our member companies’ ability to consider certain risks associated with travel outside of the United States as part of their underwriting,” Keating says.
Wasserman-Schultz became interested in travel underwriting after an insurer turned down her application for a life insurance policy because she expressed an interest in traveling to Israel.
Although insurers are state-regulated, Wasserman-Schultz says she is promoting the travel underwriting measure because she believes there should be a national floor governing the practice.
The current version of the bill includes exceptions to reflect the risks of traveling to war zones and zones in which there is a strong health risk, Wasserman-Schultz said.
“But we made sure these exclusions were tight enough so insurers couldn’t use them to bar a large number of people,” Wasserman-Schultz said.
The travel exclusion for Israel was based on the State Department’s warning list, but Wasserman-Schultz said she has seen statistics indicating that an individual is far more likely to die from a random event in the United States than in Israel.