Regulators discover unfair travel insurance practices

Regulators discover unfair travel insurance practices | Insurance Business

Regulators discover unfair travel insurance practices
A report produced by insurance regulators has determined that a good number of travel insurance companies in Canada are not treating their customers fairly.

The regulators’ report – obtained and disclosed to the public by Postmedia News – said that many travel insurance policies are sold without requiring policyholders to fill out medical questionnaires beforehand. Other policies have terms filled with complicated jargon, which might not even provide policyholders with proper coverage.

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“Current practices do not appear to meet this objective (of providing enough information for consumers to make an informed choice about policies) and, as such, do not treat customers fairly,” the report by the Canadian Council of Insurance Regulators read.

The group is preparing recommendations for travel insurance providers based on the report, Times Colonist reported.

“[Our group] is actively working with other regulators in Canada to address consumer concerns about travel insurance products sold locally and nationally,” said Chris Carter, deputy superintendent of supervision at BC’s Financial Institutions Commission (FICOM) – itself a member of the Canadian Council of Insurance Regulators.

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If approved, the recommendations would affect travel insurance sold for out-of-country travel.

Numerous issues were addressed in the recommendations prepared, including one wherein 95% of applicants were being automatically approved for policies without the insurance company properly assessing whether their medical conditions would fall under any exclusion.

“The working group considers this to be an exceedingly high automatic acceptance rate and is surprised so few applicants have to undergo medical examinations during the underwriting process,” the report observed, comparing the situation with applicants for life and health insurance.

“[The automatic approval] may give a false sense of security among consumers or create unrealistic expectations,” the report suggested.

Consumers, in their rush to secure insurance before their trips and complacent in the high approval rate of applications, are likely to snap up any policy without regard for the fine print, the report added. They could miss out on specific exclusions in their policy’s terms, which could be buried under overly-complicated medical jargon that even doctors would have difficulty parsing.

“The working group observed that the documents are often too difficult for the average consumer to read and understand,” the report said. “Insurers should carry out a diligent review of their [travel insurance] products to ensure they’re providing proper coverage to consumers.”

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