Florida Alleges Three Travel Agencies Sold Unlicensed Insurance

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#2
Western NY
3,407 Posts
Joined Mar 2004
Thanks for clearing this up a little, as some publications have indicated cease all business leading many to believe cruise sales as well.
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John

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#3
Weeki Wachee, FL
91 Posts
Joined May 2007
The update questioned why Florida was bringing the action now. I don't have all the facts, but I assume someone complained about the actions of the travel agents involved. Frankly taking 8 months to pay claims made prior to sailing seems a bit too long to me.

I was in the insurance business for almost 40 years and when I booked my first cruise a couple of years ago I really was a bit uncomfortable with the comments and statements made by my TA. He boss came to a group session which I attended regarding cruise travel coverage and I continued to get the same uncomfortable feelings. My sense was they had some managing general agency up in Tennessee that the boss thoght was really great and they always used them. What that means is that the TA bought insurance from a wholesaler out of state.

A major portion of the complaints against the TAs mentioned in the article was that they were selling policies from companies who were not licensed in the state as "admitted insurers". Not only do most agents selling insurance have to be licensed by each State in which they do business, but the insurance companies themselves have to also be licensed by the State in which they are doing business. In my example, the wholesaler who my TA uses would also have to have a non-resident Florida license in order to sell, on a wholesale basis, to TA's in Florida.

The complaints also allege that the TA's were not licensed to sell Travel products by the Florida insurance authorites and, the employees involved who actually handled clams under these policies were also not personally licensed.

It is still a bit unclear in my mind as to the need for each employee in a TA to be individually licensed. The law citations in the Complaints seem to point to general property/casualty licensing and not to Travel Accident policies. Most state have a far more liberal approach to licensing for Travel Accident sales.

I usually check out the name and Best's rating of the insurer actually writing the policy. I pay for it with a credit card which probably give me more legal ways to recover at least my premium should something go wrong than trying to recover using the State authorities.

It will be interesting to see where this one goes. The absolute extreme would be that even the cruise lines would not be able to sell the coverage, but then you would have to apply the same to credit card coverages for extended warranties, rental car auto coverage, etc. I really don't think everyone involved has to be licensed.
#4
New York, NY
21,021 Posts
Joined Aug 2003
Originally posted by Walyo
The update questioned why Florida was bringing the action now. I don't have all the facts, but I assume someone complained about the actions of the travel agents involved. Frankly taking 8 months to pay claims made prior to sailing seems a bit too long to me.

I was in the insurance business for almost 40 years and when I booked my first cruise a couple of years ago I really was a bit uncomfortable with the comments and statements made by my TA. He boss came to a group session which I attended regarding cruise travel coverage and I continued to get the same uncomfortable feelings. My sense was they had some managing general agency up in Tennessee that the boss thoght was really great and they always used them. What that means is that the TA bought insurance from a wholesaler out of state.

A major portion of the complaints against the TAs mentioned in the article was that they were selling policies from companies who were not licensed in the state as "admitted insurers". Not only do most agents selling insurance have to be licensed by each State in which they do business, but the insurance companies themselves have to also be licensed by the State in which they are doing business. In my example, the wholesaler who my TA uses would also have to have a non-resident Florida license in order to sell, on a wholesale basis, to TA's in Florida.

The complaints also allege that the TA's were not licensed to sell Travel products by the Florida insurance authorites and, the employees involved who actually handled clams under these policies were also not personally licensed.

It is still a bit unclear in my mind as to the need for each employee in a TA to be individually licensed. The law citations in the Complaints seem to point to general property/casualty licensing and not to Travel Accident policies. Most state have a far more liberal approach to licensing for Travel Accident sales.

I usually check out the name and Best's rating of the insurer actually writing the policy. I pay for it with a credit card which probably give me more legal ways to recover at least my premium should something go wrong than trying to recover using the State authorities.

It will be interesting to see where this one goes. The absolute extreme would be that even the cruise lines would not be able to sell the coverage, but then you would have to apply the same to credit card coverages for extended warranties, rental car auto coverage, etc. I really don't think everyone involved has to be licensed.
you know after I posted on some of the related posts concerning this, I did some more checking. At least in NCL's case they write through a licensed/admitted insurer that IS licensed in every state. I assume that all the cruise lines do pretty much the same thing....except they self insure the cancel for any reason part....
#5
4,575 Posts
Joined Mar 2000
It's a little bit more complicated than it seems at first glance.

Travel Protection Services was selling travel protection, NOT insurance. There were no underwriters. Rather, they were self-insuring.. taking the gamble that claim payouts would be considerably less than policy premiums collected.

The one and only question cruisers need to ask about their travel "insurance" is:
who's the underwriter? If there is none, they are not buying insurance!

I suppose the argument could be made that they were not selling insurance in the first place.
#6
Weeki Wachee, FL
91 Posts
Joined May 2007
However, the actual complaints from the State against the TAs referenced specific unlicensed insurance companies as well as the unlicensed activities of specific employees of the TAs.

Self insurance is another can of worms. I can say that most states allow self insurance in various lines of insurance for the benefit of a specific insured. This is usually a very large corporation looking to self insure major chunks of something such as workers compensation, physical damage for a large fleet of trucks, etc. There are usually very specific capital requirements for these schemes, and I cannot recall where a self insurer would ever be allowed to sell and insurance product or one masquerading as an insurance product to consumers.
#7
New York, NY
21,021 Posts
Joined Aug 2003
Originally posted by ocngypz
It's a little bit more complicated than it seems at first glance.

Travel Protection Services was selling travel protection, NOT insurance. There were no underwriters. Rather, they were self-insuring.. taking the gamble that claim payouts would be considerably less than policy premiums collected.

The one and only question cruisers need to ask about their travel "insurance" is:
who's the underwriter? If there is none, they are not buying insurance!

I suppose the argument could be made that they were not selling insurance in the first place.
Nonsense(at them not at you). They can call an apple an orange and that doesn't make it an orange. What they were selling was protection if an event happened to you, how they pay for it whether they pay for it themselves or through someone else doesn't matter it is the definition of insurance. The only self insurance you don't need a license for is if you insure yourself and pay for it if anything goes wrong...that isn't insurance but when any third party pays for something that happens to you that is insurance no matter who the underwriter is. Its insurance that is what it is verbal tricks not withstanding(an employer may self insure its employees health insurance because federal law(ERISA) allows them to do so and the states can't regulate it-there is no equivalent for travel insurance - a company can waive its liability to them a car reantal company for loss of the car because they aren't selling insurance its the obligation to pay them that is waived-some states call it insurance anyway) and some states allow self insurance in specific instances where certain requirements are met but its not that often...
#8
New York, NY
21,021 Posts
Joined Aug 2003
Originally posted by Walyo
However, the actual complaints from the State against the TAs referenced specific unlicensed insurance companies as well as the unlicensed activities of specific employees of the TAs.

Self insurance is another can of worms. I can say that most states allow self insurance in various lines of insurance for the benefit of a specific insured. This is usually a very large corporation looking to self insure major chunks of something such as workers compensation, physical damage for a large fleet of trucks, etc. There are usually very specific capital requirements for these schemes, and I cannot recall where a self insurer would ever be allowed to sell and insurance product or one masquerading as an insurance product to consumers.
This self insurance still is regulated by the states and has specific requirements.
#9
Southern California
36,889 Posts
Joined Oct 2005
Originally posted by ocngypz
It's a little bit more complicated than it seems at first glance.

Travel Protection Services was selling travel protection, NOT insurance. There were no underwriters. Rather, they were self-insuring.. taking the gamble that claim payouts would be considerably less than policy premiums collected.

The one and only question cruisers need to ask about their travel "insurance" is:
who's the underwriter? If there is none, they are not buying insurance!

I suppose the argument could be made that they were not selling insurance in the first place.
If it walks like a duck and it quacks like a duck - its a duck. A rose by any other name is still a rose.