US travel assistance regulation

ITIJ 214, November 2018

Greg Mitchell, Chair of Frost Brown Todd’s Insurance Industry Group in the US, opines on what he sees as the uneven landscape of travel assistance services regulation.

Non-insurance travel assistance services can help give consumers peace of mind while travelling abroad that travel insurance alone cannot provide. A promise to indemnify for loss is of little immediate comfort to a vacationer that discovers, upon arriving in Rome for a two-week trip, that the airline has misplaced their luggage. A trip protection plan with included non-insurance assistance services can assist in minimising the disruption to planned travel in a way that insurance alone simply cannot.
Staring down the prospect of two weeks in a foreign county with nothing but the clothes on their back, a consumer is not terribly concerned with what portion of their travel protection plan is regulated by their local department of insurance and which is not. However, regulators in the US are increasingly concerned with this exact issue, and the inclusion of travel insurance with non-insurance assistance services has been a major component of the increased regulatory scrutiny in the travel insurance space. Recent class action suits against certain cruise lines and airlines have highlighted this concern, with the class action plaintiffs alleging that the practice of bundling travel insurance policies with cancellation fee waivers and assistance services contributes to an unfair lack of price transparency.
Keeping track of changes
As the scrutiny on the travel insurance industry increases, it is imperative that carriers, producers, administrators, and retailers understand the evolving regulatory landscape for non-insurance assistance services. These impact not only outbound travel products sold to residents of the US travelling abroad, but also the adjudication of claims and the provision of assistance services to foreign nationals while in the US.   
The two principal regulatory structures dominating the regulatory horizon are the recent multistate regulatory settlement agreements (RSAs) and the NAIC’s forthcoming Travel Insurance Model Act.
The Model Act expressly permits the offering of travel protection plans that bundle travel insurance, assistance services, and trip cancellation waivers for one price, provided that information regarding the features and pricing of each are disclosed at or prior to the time of purchase, and the fulfillment materials clearly describe and separately delineate each type of product. The RSAs permit bundling where not prohibited by the insurance law in a participating state, so long as the applicable disclosures are made as required by state law. Therefore, it does appear that a disclosure-based safe harbour permitting the bundling of these products at the point of sale will soon emerge.
it is imperative that carriers, producers, administrators, and retailers understand the evolving regulatory landscape for non-insurance assistance services
What do we mean by ‘assistance’?
The larger question looming for the travel industry is the meaning of ‘assistance services’. Here, the NAIC’s Model Act and the RSAs do not align.
Both the Model Act and the RSAs provide non-exhaustive examples of travel assistance services such as multilingual assistance or event ticketing, with catchalls for ‘any other services furnished in connection with planned travel’. However, the Model Act defines travel assistance services as ‘non-insurance services for which the consumer is not indemnified based on a fortuitous event, and where providing the service does not result in transfer or shifting of risk that would constitute the business of insurance’. The RSAs define ‘assistance services’ as non-insurance services furnished in connection with planned travel but not directly or indirectly related to the purchasing or administration of travel insurance.  
Under the Model Act’s definition, a non-insurance service that does not involve the transfer and shifting of risk may be bundled with travel insurance and sold for a single price so long as the necessary disclosures are made. However, the same service may not fall under the definition of assistance services in the RSAs, in which case it is not clear whether the same disclosures would provide the safe harbour.  
Bring it all together
To return to the lost luggage example, an assistance service staple, under the NAIC’s Model Act, a service made available to travel insurance policyholders in which dedicated professionals help the consumer co-ordinate with the commercial carrier for the return of lost luggage, or navigate the process of replacing a lost passport while overseas, would likely be ‘travel assistance services’, as such services would not involve the shifting and distribution of risk (depending on the fee arrangement between the insurance carrier and the assistance service provider).  
However, under the RSAs and subject to state exceptions, such services may be interpreted as indirectly related to the administration of a travel insurance policy that provides coverage for the loss or theft of luggage. Where states adopt the Model Act, the proper disclosures will create a safe harbour to allow the bundling of such a service with a travel insurance product for a single price.
As the international travel industry works to meet consumer demand for non-insurance assistance services, both inbound to the US and outbound, it is critical that insurance carriers, service providers, producers and retailers keep their focus on the developing regulatory landscape.
Greg Mitchell, Chair of Frost Brown Todd’s Insurance Industry Group.

Greg Mitchell, Chair of Frost Brown Todd’s Insurance Industry Group in the US.