Cease and Desist

Travel Guard and its underwriter are cited for lack of insurance policy approvals, allegedly deceptive coverage promotion

By: David Peterkofsky

The Washington State Insurance Commissioner’s office ordered one of the industry’s largest suppliers of travel insurance to stop selling policies in that state.

Insurance Commissioner Mike Kreidler on Aug. 8 issued cease-and-desist orders against Wisconsin-based Travel Guard Group and its underwriter, Pennsylvania-based Insurance Company of North America, citing the companies’ failure to obtain approval on policies and rates from the Insurance Commissioner’s office before selling to Washington residents, as state law requires.

The order against Travel Guard also alleges that the insurance carrier uses advertising that is false or misleading with regard to the extent of its coverage, particularly relating to terrorism.

In a press release announcing the cease-and-desist orders, Kreidler pointed to Travel Guard’s promotional materials in relation to its post-Sept. 11 coverage as being of particular concern.

“Some of Travel Guard’s past promotional materials implied that this insurance includes terrorism coverage when, in truth, it seems that much of it does not,” Kreidler said.

The action against Travel Guard comes after a three-month investigation into a complaint by a Washington woman that she did not receive a premium refund from Travel Guard. The woman initially contacted the Consumer Protection Division of the Insurance Commissioner’s office.

The orders require Travel Guard and Insurance Company of North America to stop representing themselves as insurance companies to Washington residents. They also prohibit them from soliciting Washington residents to purchase unapproved coverage.

A spokesperson from Kreidler’s office said Travel Guard has sold a variety of unapproved travel insurance products since 1997 and some 120,000 travel insurance policies to Washington residents in 2001 alone.

In a statement, Travel Guard spokesman Dan McGinnity confirmed that his company and INA have a contract to file their products in each state and “are working together right now to resolve this filing issue.”

McGinnity’s statement did not address the insurance commissioner’s allegation that Travel Guard’s promotions included false and misleading wording.

But Sandi Peck, a spokeswoman with Washington’s insurance office, said a Travel Guard promotional video called “Stand Tall” focuses on losses from Sept. 11, even though some Travel Guard policies offered through wholesalers do not cover losses from acts of terrorism. The company screened the video for state officials after the investigation began in June.

Peck said her office notified the ASTA regional chapter of the order against Travel Guard and is mailing out notices to all agents licensed to sell Travel Guard coverage in Washington.

Meanwhile, Travel Guard remains contractually responsible for current policies. However, Washington agents who sell Travel Guard have no choice but to use other insurance vendors for future sales.

“At this point, we are advising our Washington agencies to pull the Travel Guard materials out of their public areas and put a hold on Travel Guard sales,” said Mike Estill, general manager of the Western Association of Travel Agencies, a co-op with approximately 45 members in Washington.

Travel Guard is one of WESTA’s two preferred insurance vendors. Estill said WESTA is now helping members expedite the sign-up process to sell Travel Insured, WESTA’s other preferred insurance provider, if they’re not already set up to do so.

Agents or clients with questions about their coverage can contact the Washington State Insurance Commissioner’s office at 800-562-6900 or visit www.insurance.wa.gov.