NAIC Consumer Alert: Travel Insurance
Do you need travel insurance?
Consumer Reports, July 2012
Travel Insurance: Peace of mind while you travel.
Centers for Disease Control (CDC). Last reviewed May 22, 2018
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Last Updated 10/30/18
Issue: Travel insurance is a type of insurance for risk associated with traveling such as loss of luggage, trip cancellation and delays. The popularity of travel insurance is increasing. According to the U.S. Travel Insurance Association (UStiA), in 2016 consumers spent approximately $2.8 billion on various types of travel insurance products, an increase of 19.1% from 2014. Heightened uncertainty about global events such as terrorism or natural disasters may play a part in this rise.
Background: Travel insurance gives consumers peace of mind when booking a trip that they will be reimbursed for part of or all their expenses should an undesirable event occur which prompts cancellation or interruption of the trip. Policies are generally good for U.S. and international travel and usually cost between 4-8% of the total trip price.
The main types of travel insurance include:
As with any insurance policy, it is good practice to check not only what is included, but what conditions are excluded from the policy, as well. Although every policy is different, some of the most common travel policy exclusions are:
Travel insurance products are frequently bundled together with non-insurance products and sold as a package. Even though products and services may be bundled together, only the insurance products have the oversight of state insurance departments. Two of the most common non-insurance travel products are cancellation fee waivers and travel assistance services. Cancellation fee waivers provide coverage for fees that may be incurred when cancelling travel plans. Travel assistance services provide things like translation assistance, referrals to medical services, and assistance with lost luggage or travel documentation.
Status: In November 2015, the U.S. Travel Insurance Association and the Tourism and Travel Industry Consumer Coalition raised concerns regarding lack of specificity and consistent application of regulation of the travel insurance industry to the Property and Casualty (C) Committee. This prompted the committee to appoint a Travel Insurance (C) Working Group in 2016 to consider development of a model law or guideline to establish appropriate regulatory standards for the travel and tourism insurance industry. Prior to the National Summer Meeting in 2017, the Executive (EX) Committee voted to proceed with the development of a model law. During the year, the Working Group drafted the model law using the National Conference of Insurance Legislators (NCOIL) Travel Insurance Model Act as a starting point. On June 13, 2018 the Working Group adopted the Travel Insurance Model Act. This model law defines regulatory structure related to travel insurance and covers market regulation, premium tax, rate regulation, and enforcement. The Property and Casualty Insurance Committee approved the model law on August 6, 2018 at the Summer National Meeting in Boston. It will be considered by the full NAIC membership during the Fall National Meeting in San Francisco in November 2018.