Consumer Group Asks for COVID-19 Underwriting Transparency

Two consumer group representatives say life insurers should be open about their underwriting criteria for COVID-19 survivors, and that regulators should make sure that any COVID-19-related underwriting criteria are reasonable.

J. Robert Hunter and James Hunt made that plea in a letter sent to David Altmaier, who is the president of the National Association of Insurance Commissioners, and to Marlene Caride, the chair of the NAIC’s Life Insurance and Annuities Committee.

• See: Consumer Federation of America COVID-19 Underwriting Policy letter; COVID-19 and Fast Underwriting Are a Bad Mix: Veteran Underwriter

Hunter is the insurance director at the Consumer Federation of America  and a former Texas insurance commissioner.

Hunt is a life insurance actuary, a Consumer Federation advisor and a former Vermont insurance commissioner.

The Consumer Federation reps sent the letter last week and announced it Monday.

In addition to sending the letter to the leaders of the NAIC, the Consumer Federation representatives sent copies to the chief executive officers of 10 large insurers; to Susan Neely, the president of the American Council of Life Insurers; and to Andrew Beal and Kay Noon, two members of the NAIC support staff.

COVID-19 Restrictions

The Consumer Federation reps cited an article from Reuters that indicated that life insurers in Europe are starting to impose life insurance policy purchase restrictions on people who have recovered from COVID-19. Some insurers, for example, are requiring consumers to wait until they have been free from COVID-19 for at least 30 days before applying for life insurance.

Other insurers are imposing waiting period requirements on consumers with certain kinds of symptoms, even if those consumers have not been diagnosed with having the virus that causes COVID-19, according to Reuters.

“Our initial inquiries have not turned up such changes in America, but the possibility of similar actions by life insurers here in America is high,” Hunter and Hunt write.

“Some reasonable precautions by life insurers are understandable, but to burden COVID patients and their families a second time is unjust and unfair,” they continued.

NAIC is a group of state insurance regulators. It cannot change state laws or regulations directly, on its own, but states often start with NAIC models when developing their own laws and regulations.

In some cases, states arrange for certain types of NAIC rules changes, such as technical financial reporting changes, to take effect automatically.

Establish a Model

The Consumer Federation reps say the NAIC should develop a model rule for COVID-19-related life insurance underwriting procedures.

The model rule should apply to “life underwriters who might delay or deny life insurance coverage because an applicant had COVID or may have had it previously,” Hunt and Hunter write.

“The rule should require that the underwriting rules employed be made public prior to use, be totally transparent and meet standards for reasonability as to what would trigger delay or denial of coverage,” they recommended.

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