Travel Insurance Consumer Protections

The bill adopts, in part, the National Association of Insurance Commissioners' travel insurance model act (model act), which provides a legal framework within which travel insurance must be sold in Colorado.

The "Travel Insurance Model Act" applies to travel insurance that covers a resident of Colorado; that is sold, solicited, negotiated, or offered in Colorado; and for which the policies and certificates are issued for delivery in Colorado.

With respect to the model act, the bill:

• Requires an insurer to pay premium tax on travel insurance premiums paid by specified persons;
• Requires consumer disclosures for travel protection plans and requires insurers to send fulfillment materials and specific contact information for persons providing travel assistance services and cancellation fee waivers;
• Declares the following practices unfair or deceptive practices:
• Offering or selling travel insurance that could never result in the payment of any claims for the insured; and
• Marketing blanket travel insurance coverage as free;
• Requires travel insurance documents to be consistent with the travel insurance policy, including forms, rate filings, and certificates of insurance;
• Requires disclosure of preexisting condition exclusions prior to the purchase of travel insurance and in the coverage fulfillment materials;
• Unless the trip for which the travel insurance was purchased has commenced or the policyholder has filed a claim, allows the policy to be cancelled or the cost refunded within a specified time period;
• Prohibits the use of a negative option or "opt out" that requires the consumer to take affirmative action to deselect coverage;
• Allows mandated coverage when the consumer's travel destination requires travel insurance as a condition of purchasing the trip or travel package;
• Prohibits a person from acting as or representing that the person is a travel administrator, unless the person is a licensed insurance provider for property and casualty insurance in Colorado for activities permitted under that license; and
• Allows travel insurance that provides certain coverage to be filed under either an accident and health line of insurance or an inland marine line of insurance.

Further, the bill makes conforming changes to existing law relating to licensing limited lines travel insurance producers and registering travel retailers.

Specifically, the bill:

• Expands the definition of "limited lines travel insurance producer" to include a "travel administrator";
• Includes in the definition of "travel insurance", coverage for emergency evacuation, repatriation of remains, and, as approved by the commissioner of insurance, any other personal risks relating to travel;
• Prohibits a person from acting as a limited lines travel insurance producer or travel retailer unless the person is licensed or registered, respectively;
• Specifies that the grounds for suspension and revocation and the penalties applicable to resident insurance producers are applicable to limited lines travel insurance producers and travel retailers; and
• Authorizes a person licensed in a major line of authority as an insurance producer to sell, solicit, and negotiate travel insurance under an individual, group, or blanket policy.

The model act codified in this bill does not include provisions that are inapplicable to Colorado, including provisions relating to third-party administrators and managing general agents. Further, unlike the model act, Colorado requires that an insurer offering or selling travel insurance that provides coverage for sickness, accident, disability, or death occurring during travel, emergency evacuation, or repatriation of remains hold both property and casualty and accident and health lines of authority.

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)