Tuesday, February 14, 2012, the Minnesota Insurance Department announced an enforcement action against Travel Guard and their underwriting company, National Union Fire Insurance Company (a part of Chartis), due to allegations that they violated Minnesota State Law by automatically enrolling travelers, who booked their trip through Travelocity.com, in travel insurance without their affirmative consent. The Minnesota Insurance Department further indicated that as part of the enforcement action that Travel Guard and their underwriter have agreed to refund travelers for the premium that they paid. For further information please visit the Minnesota Insurance Department.
Even though this isn’t specifically related to the recent rule change by the U.S. Department of Transportation it address almost the same issue – opt-out sales methods on the internet. I wrote a recent article about the DOT rule change that became effective January 25, 2012. It effectively eliminates online airline agents from using opt-out sales methods for travel insurance and other related services. Now the DOT requires the traveler to “opt-in” for ancillary travel sales. In publication of their rule the DOT said that “optional services are included in the total price of the ticket due to the deceptive nature of such opt-out provisions”. In a similar vein the Minnesota Insurance Department has indicated that the basis for their action against Travel Guard and their underwriter is due to “an unfair method of competition and deceptive practices in the business of insurance” by using the opt-out sales method.
Will this be the last that we hear of this? Probably not. Travel Guard is not the only company that could be involved. Several of the other travel insurance companies (really marketing companies) have also done the exact same thing with other online airline agents. In addition it is also a common practice with tour operators and cruise lines. Almost every State has laws similar to Minnesota and since the Federal Government and Minnesota already have determined opt-out sales methods to be a “deceptive practice” than you will probably see other State and insurance companies involved.