What do You Know About Travel Insurance ? Part One
The travel insurance sold to cruise ship passengers at best can be described as "caveat emperor" , that is buyer beware insurance. There have been any number of informative articles written on the subject of travel insurance but some fail to point out what
insurance is all about.
PRODUCTION AND DISTRIBUTION: Whether the insurance is purchased through a cruise line or travel agent, invariably there is a Managing General Agent( a MGA) involved that receives a commission from the underwriting insurance company. Actually the purchaser of the insurance pays the commission that has been loaded into the rates.
Travelex, Travelguard, Triple A, CSA, Berkelycare and Access America are MGA's. BerkelyCare handles the insurance for many of the larger cruise lines in behalf of the National Union Fire Insurance Company of Pittsburgh
THE INSURANCE POLICY: You do not receive a copy of the Group Policy but a Certificate of Insurance or Evidence of Insurance along with a synopsis of the coverage, restrictions, limitations and exclusions. The policy is often issued in states that are lax in supervision and enforcement by insurance departments. The Group Policy may be a class that is exempt from supervision or enforcement. In some states the Group policy may be exempt from the state "Fair Claims Practice Laws.
When we first began to buy travel insurance the rates were about $4.50 to $5.50 for each $ 100 of coverage. Nowadays is seems to costing between $7 to $10 or more, per hundred
dollars of coverage; recently we paid Travelex $8.98 per $100. There are some insurers offering the younger passengers insurance at lower rates. Unfortunately the younger, healthier passengers tend not to buy insurance. The insurers insist they need the higher rates to pay the claims(why not reduce the commissions ?) but they end up writing to adverse selection. The passengers who may have one foot on a banana peel and the other in the grave are more apt to buy the insurance.
There was a time we cruised with Princess Cruises which provided insurance underwritten by National Union Fire Insurance that is licensed and admitted in California. I communicated with the California Insurance Department whether the department might intercede in my behalf if there was a claims dispute. The National Union Fire Insurance Co. told the department that the Group Policy they issued was "no business of the department." The Insurance department agreed. The next time we cruised with Royal Caribbean where the same insurer was involved I asked the New York Insurance Department if they have jurisdiction since the insurer is license and admitted in the state. The department in formed me that since the Group Policy was issue in Florida, I should contact the Florida Insurance Department. That department told me if I was a resident of the state they would intercede, but if not, then they did not have the resources to help.