Mark Pestronk is a Washington-based lawyer
specializing in travel law.
Q:Whatever happened to the push to deregulate travel insurance licensing at the state level? I remember lots of
publicity a few years ago about ASTA’s ef-
fort to get each state’s law changed so that
travel agents would no longer need insur-
ance licenses. Did that effort succeed? Can
we sell travel insurance to anyone in every
state without a license?
A:The travel insurance reform effort has succeeded beyond my wildest dreams. Travel agencies, tour oper-
ators and their employees no longer need
insurance licenses in at least 41 states and
the District of Columbia in order to sell
travel insurance. As of a year ago, reform
was also expected in at least four addi-
tional states: Connecticut, Massachusetts,
South Carolina and Vermont.
I use the term “at least” because I could
not find any compilation of state actions
more recent than March 2016. At that time,
efforts at reform were also underway in the
remaining states: Hawaii, Idaho, Ohio, New
York and Pennsylvania.
The effort in New York has not yet been
successful. According to the website of the
state’s Department of Financial Services,
travel agents need licenses, but there are no
tests or continuing education requirements
to obtain or maintain a license.
The new system is possible because states
passed a new, uniform law called the Travel
Insurance Model Act. Agencies can thank
not only ASTA but also the USTOA and
the U.S. Travel Insurance Association, all of
which lobbied for the new law.
The system is not exactly deregulation
because it makes travel insurance companies take over the supervisory, education
and policing roles that states used to have.
Nevertheless, it is a tremendous improvement over the patchwork of laws and licensing requirements that preceded it.
Under the new law, travel agents cannot
“sell” insurance in the same sense that a life
insurance salesperson can. Rather, you are
limited to “offering and disseminating” policies offered by your travel insurance supplier and explaining the features and benefits
using materials provided by the insurer.
So, you cannot “evaluate or interpret the
technical terms, benefits and conditions of
the offered travel insurance coverage,” and
you cannot “evaluate or provide advice concerning a prospective purchaser’s existing
insurance coverage.” This is probably just as
well, as the policies are quite hard to interpret, and you could be liable to the client if
he relies on your mistaken advice.
One more thing: Cancellation fee waivers
offered for sale by travel suppliers are not
“insurance” within the meaning of any insurance law, so such sales are totally unregulated, which means you are free to evaluate
and interpret them to clients.
Back to New York for a moment. Earlier
this year, Financial Services enacted comprehensive new data-protection requirements that every licensee has to implement.
The requirements are onerous and in some
cases impossible to fulfill. For example, every licensed travel agency will need to adopt
“due diligence processes used to evaluate the
adequacy of cybersecurity practices of Third
Party Service Providers,” which would include your GDS vendor. The new rules will
certainly make agencies think twice about
selling insurance in New York in the future.
Like the seller of travel laws, the Travel
Insurance Model Act applies to companies
that sell to consumers in the state even if
the agency has no office there. Once you
are registered with an insurance provider
under the model law, you can “offer and
disseminate” to clients in every state where
the model law has been adopted and your
insurance provider is itself licensed.
To submit a question for Legal Briefs,
email Mark Pestronk at mark@pestronk
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New law makes insurance sales less complicated for agents
Agents no longer
licenses in the
states that have
passed the law.