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ARIZONA STATE SENATE
Fifty-Fourth Legislature, Second Regular Session
AMENDED
travel insurance
Purpose
Adopts the Travel Insurance Model Act (Act).
Background
Current statute permits a travel retailer to offer and issue travel insurance under a limited lines travel insurance producer business entity license, if certain conditions are met. A travel insurance producer or travel retailer must provide to purchasers of travel insurance all of the following: 1) a description of the material terms or the actual material terms of the insurance coverage; 2) a description of the process for filing a claim; 3) a description of the review or cancellation process for the travel insurance policy; and 4) the identity and contact information of the insurer and limited lines travel insurance producer.
Travel insurance is insurance coverage for personal risks incident to planned travel, including: 1) interruption or cancellation of a trip or event; 2) loss of baggage or personal effects; 3) damages to accommodations or rental vehicles; and 4) sickness, accident, disability or death occurring during travel. Travel insurance does not include major medical plans, which provide comprehensive medical protection for travelers with trips lasting six months or longer, including those working overseas as expatriates or military personnel being deployed (A.R.S. § 20‑333).
In 2015, the National Association of Insurance Commissioners (NAIC) formed a Travel Insurance Working Group to consider the development of a travel insurance model law and establish appropriate regulatory standards for the travel and tourism industry. In 2018, the NAIC adopted a Travel Insurance Model Act. The Travel Insurance Model Act is intended to promote the public welfare by creating a comprehensive legal framework within which travel insurance may be sold.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Travel Administrators
1. Prohibits a person from acting or representing itself as a travel administrator for travel insurance, unless the person:
a) is a licensed property and casualty insurance producer in Arizona for activities allowed under their license; or
b) holds a valid managing general agent license in Arizona.
2. Exempts a travel administrator and its employees from adjuster licensing requirements for travel insurance it administers.
3. Renders an insurer who underwrites travel insurance responsible for:
a) the acts of the travel administrator administering that travel insurance;
b) ensuring that the travel administrator maintains all books and records relevant to the insurer; and
c) ensuring that the travel administrator makes the books and records available to the Director of the Arizona Department of Insurance (DOI) on request.
Classification
4. Permits travel insurance to be in the form of an individual, group or blanket policy.
5. Classifies and files travel insurance, for purposes of rates and forms, under an inland marine line of insurance, except that travel insurance that provides coverage for sickness, accident, disability or death occurring during travel may be filed under an accident and health line of insurance.
6. Allows eligibility and underwriting standards for travel insurance to be developed and provided based on travel protection plans that are designed for individual or identified marketing or distribution channels, if those standards also meet Arizona's underwriting standards for inland marine lines of insurance.
Sale of Travel Insurance
7. Subjects all persons offering travel insurance to Arizona residents to unfair trade practice and fraud statutes.
8. Classifies the offering or selling of a travel insurance policy that could never result in any claim payment for any insured under the policy as an unfair trade practice.
9. Requires all documents provided to consumers before the purchase of travel insurance to be consistent with the travel insurance policy.
10. Requires travel insurance policies or certificates that contain preexisting condition exclusions to provide information and an opportunity to learn more about preexisting condition exclusions before the time of purchase and in the coverage's fulfillment materials.
11. Requires a policyholder or certificate holder to be provided fulfillment materials and required information as soon as practicable following the purchase of a travel protection plan.
12. Allows, if an insured has not started a covered trip or filed a claim under travel insurance coverage, a policyholder or certificate holder to cancel the policy or certificate for a full refund of the travel protection plan until at least:
a) 15 days after the date of delivery of the travel protection plan's fulfillment materials by postal mail; or
b) 10 days after the date of delivery of the travel protection plan's fulfillment materials by means other than postal mail.
13. Requires policy documentation and fulfillment materials to disclose whether a travel insurance is primary or secondary to other applicable coverage.
14. Specifies that travel insurance marketed directly to a consumer through an insurer's website or by others through an aggregator site is not an unfair trade practice or violation of law if an accurate summary or short description of the coverage is provided on the website and the consumer has access to the policy.
15. Prohibits a person from offering, soliciting or negotiating travel insurance or travel protection plans on an individual or group basis by using a negative or opt out option that requires a consumer to take an affirmative action to deselect coverage.
16. Classifies, as an unfair trade practice, marketing blanket travel insurance coverage as free.
17. Specifies, in the event that a consumer's destination jurisdiction requires insurance coverage, that it is not an unfair trade practice to require that a consumer choose between the following options as a condition of purchasing a trip or travel package:
a) purchasing the coverage required by the destination jurisdiction through the travel retailer or limited lines travel insurance producer supplying the trip or travel package; and
b) agreeing to obtain and provide proof of coverage that meets the destination jurisdiction's requirements before departure.
Travel Protection Plans
18. Allows a travel protection plan to be offered for one price for the combined features that the travel protection plan offers in Arizona if both:
a) the travel protection plan clearly discloses to the consumer, at or before the time of purchase, that it includes travel insurance, travel assistance services and cancellation fee waivers, as applicable, and provides information and an opportunity, at or before the time of purchase, for the consumer to obtain additional information regarding the features and pricing of each; and
b) fulfillment materials that describe and delineate the travel insurance, travel assistance services and cancellation fee waivers in the travel protection plan and include the travel insurance disclosures and contact information for persons providing travel assistance services and cancellation fee waivers, as applicable.
Premium Tax
19. Requires a travel insurer to pay premium tax on travel insurance premiums paid by:
a) an individual primary policyholder who is an Arizona resident;
b) a primary certificate holder who is an Arizona resident and who elects coverage under a group travel insurance policy; and
c) a blanket travel insurance policyholder that is an Arizona resident or has its principal place of business or the principal place of business of an affiliate or subsidiary that has purchased blanket travel insurance in Arizona for eligible blanket group members, subject to certain apportionment rules.
20. Requires a travel insurer to:
a) document the state of residence or principal place of business of a policyholder or certificate holder for premium tax purposes; and
b) report as premium only the amount allocable to travel insurance and not any amounts received for travel assistance services or cancellation fee waivers.
Miscellaneous
21. Designates this legislation as the Travel Insurance Model Act.
22. States that the purpose of the Act is to promote the public welfare by creating a comprehensive legal framework within which travel insurance may be sold in Arizona.
23. Applies the requirements of the Act to travel insurance that covers Arizona residents and that is sold, solicited, negotiated or offered in Arizona and to policies and certificates that are delivered or issued for delivery in Arizona.
24. Specifies that the Act does not apply to cancellation fee waivers or travel assistance services unless otherwise provided.
25. States that Arizona insurance laws continue to apply to travel insurance, except that the Act supersedes state law applicable to travel insurance.
26. Redefines travel insurance as an insurance coverage for personal risks incident to planned travel including:
a) interruption or cancellation of a trip or event;
b) loss of baggage or personal effects;
c) damages to accommodations or rental vehicles;
d) sickness, accident, disability or death occurring during travel;
e) emergency evacuation;
f) repatriation of remains; and
g) any other contractual obligations to indemnify or pay a specified amount to a traveler on determinable contingencies related to travel as approved by the Director of DOI.
27. Excludes, from the definition of travel insurance, major medical plans that provide comprehensive medical protection for travelers with trips lasting longer than six months, such as those working or residing overseas as an expatriate, or any other product that requires a specific insurance producer license.
28. Excludes, from the definition of travel insurance, a prearranged funeral agreement by a funeral service provider.
29. Modifies the definition of limited lines travel insurance producer to include a travel administrator in addition to a licensed managing general agent or third-party administrator and a licensed insurance producer.
30. Defines terms.
31. Makes technical and conforming changes.
32. Becomes effective on the general effective date.
Amendments Adopted by Committee of the Whole
· Excludes, from the definition of travel insurance, a prearranged funeral agreement by a funeral service provider.
Senate Action
FIN 1/15/20 DP 8-1-1
Prepared by Senate Research
January 30, 2020
MG/AB/gs