Dean Martin notoriously claimed: “If you can lie on the floor without hanging onto the carpet, you’re not drunk.” That’s not a definition that most travel insurers would accept, but the industry might benefit from a firmer consensus on how much is too much. Robin Gauldie considers policy variations that are catching consumers unawares
A report by the British Insurance Brokers’ Association (BIBA) warns that a trend towards enforcement of tighter alcohol exclusion clauses could cause problems for insurers and their clients (see ITIJ Issue 138, July 2012).
BIBA head of corporate affairs, Graeme Trudgill, says there is a greater need for insurers to make sure that their clients understand the implications of such clauses, and to define clearly what they mean by ‘excessive alcohol intake’. He cited one company’s exclusion of claims arising from a blood alcohol level equivalent to drinking two litres of beer, 200ml of spirits or 350 ml of wine in a single session. At the other end of the scale, some companies exclude any claims resulting from using alcohol.
What is reasonable?
On its website, the Association of British Insurers advises consumers: “You are on holiday, so drinking a reasonable amount of alcohol is not excluded.” But what is a ‘reasonable amount’. Should there be industry-wide guidelines defining ‘excessive alcohol intake’? Or would a ‘zero tolerance’ approach be desirable – or feasible?
Travel insurers might look at how their colleagues in motor insurance have addressed this issue. Last year, several insurers in the UK began introducing policy wording that seemingly gave scope to deny claims for any accident if the driver were ‘under the influence of alcohol’, but without clearly defining what ‘under the influence’ means. Companies that introduced the exclusion, including Zurich and Allianz, have since withdrawn it after intervention by BIBA.
Allianz has, however, retained the alcohol exclusion cause in its travel policies.
“The principle of an insurance policy is that it is there to cover you for unexpected events,” says Robert Sharp, Allianz’s technical claims case manager. “If you are under the influence of substances or alcohol that impair your judgement it could be argued that you are not in a position to take appropriate care of yourself and therefore any accident could not be considered unforeseen.” He added: “We know that most people like to have a couple of drinks when they are on holiday and we are certainly not saying they can’t do that, but what we do say is that they may not be covered if they behave irresponsibly or take unnecessary risks. If police or hospital tests reveal there were excess levels of alcohol present this may have a detrimental effect on any insurance cover.”
Meanwhile, the UK’s Association of Chief Police Officers gave its judgement that ‘being under the influence’ implied simply being over the legal blood alcohol limit for drivers. Could that provide a guideline for insurers? Perhaps not.
Worldwide, permissible blood alcohol concentration units (BAC) range from nil in most Muslim countries – and in several European Union (EU) destinations including Romania, Hungary and the Czech Republic – up to 0.8 per cent in the UK, US, Canada and Jamaica and an anything-goes no-limits policy in the Dominican Republic. So a driver defined as having ‘excess levels of alcohol’ by police in a zero-tolerance destination could have a claim rejected on those grounds, even if his BAC were within the more generous limits of his home country.
In Florida’s beach resorts … the combination of older drivers and drunken college students creates an annual spike in accident claims
There is some evidence that younger travellers, especially those from countries with a binge-drinking culture such as the UK, Australia or the US, account for a larger proportion of claims. But claims that could be turned down under alcohol exclusion clauses are not restricted to younger drinkers. In Florida’s beach resorts – popular destinations for hard-partying American ‘spring breakers’ as well as for older ‘snowbirds’ – the combination of older drivers and drunken college students creates an annual spike in accident claims, says one US source. Spring Break season (from mid-February to mid-April) also results in a surge in claims from destinations such as Cancun, Puerto Vallarta and Jamaica, according to US insurers, and most of the claimants will have been under the influence.
Meanwhile, mature travellers may be less likely to go snowboarding, waterskiing or surfing while drunk, but they are more vulnerable to illnesses such as cardiac arrest to which a lifetime of even ‘moderate’ drinking can be a contributing factor. Some exclusion clauses are worded in such a way that they could allow the insurer to turn down a claim for treatment or repatriation relating to such an incident – even if the client was sober at the time and had ceased consuming alcohol altogether some years previously.
A broad stroke
Broadly worded exclusion causes may also give insurers a pretext for rejecting claims arising from alcohol use, not by the insured, but by another party.
The British Financial Ombudsman’s Office cites a case in which an insurer invoked its exclusion clause to refuse a claim from a client who cut short her holiday to fly home when her father was hospitalised with liver disease caused by alcohol abuse. The insurer said its policy excluded all alcohol-related claims, however caused, and argued that it was unreasonable to expect insurers to cover any claims arising directly from the long-term or short-term effects of alcohol. The client argued that it was unfair to apply the exclusion clause in this case, since her father had not been drinking and was not drunk when admitted to hospital.
The outcome may help to provide some guidance for travel insurers. The Ombudsman decided that there was nothing inherently unreasonable or unfair about the exclusion clause, but said that the firm had been unfair to apply it in these circumstances.
“We interpreted the phrase ‘influence of intoxicating liquor’ as indicating a state of drunkenness and/or lack of control over one’s actions,” the Ombudsman’s Office stated. “It was designed to exclude claims that arose from the insured person being drunk, not from the mere consumption of alcohol. We considered that if the firm’s interpretation of the clause in question were upheld, the exclusion would be unreasonably wide and would exclude all sorts of situations for which most people would expect to be covered. For example, it would exclude a claim where a drunken driver injured a holidaymaker.”
Such wide-reaching exclusions could also exclude claims relating to alcohol-related deaths or injuries in ‘adventure tourism’ accidents where staff such as balloon pilots, dive leaders or skydiving instructors are found to have had alcohol or drugs in their systems. In May this year, New Zealand’s Prime Minister (and Tourism Minister) hinted that his government might introduce drug and alcohol testing for adventure industry staff after revelations that staff in two companies involved in fatal skydiving and ballooning accident had cannabis in their systems. Such action by governments may act as a deterrent, but it could also provide insurers whose policies include ‘unreasonably wide’ exclusions with a pretext for turning down claims, even if the clients themselves were completely sober and drug free at the time of the incident.
Travel insurers also face the problem of determining whether the insured was intoxicated at the time of the loss or accident, and to what extent. This is particularly tricky in terms of deciding on relatively minor claims relating to theft or loss of such items as cameras, phones or handbags. In theory, some clauses could exclude such claims if the client were proven to have been irresponsibly drunk at the time of the theft or loss. In practice, insurers are likely to continue relying on the good faith of the client making a claim and on the judgment of claims adjusters. Taking a tougher line by denying claims from clients who admit to having been ‘mildly inebriated’ is likely to be counter-effective by discouraging such clients from being fully transparent, instead driving them into flat denial and a ‘my word against yours’ stance. The issue of sexual assault also, inevitably, raises its ugly head. Most incidents of sexual assault against young women on holiday involve alcohol. How many insurers would dare to invoke ‘contributory negligence’ to refuse related claims for medical treatment or repatriation resulting from such incidents?
Cases involving vehicles are less problematic. Drivers involved in accidents are likely to be routinely tested for blood alcohol levels by police at the scene, giving insurers fairly reliable evidence on which to base a decision. France has recently made it compulsory for breath-testing equipment to be carried in all vehicles, making it virtually impossible for drivers involved in incidents to evade testing, even if police are not immediately on the scene.
There is some evidence that insurers are asking hospitals, clinics and consular representatives for more detailed medical reports after accidents. This approach can be counter-effective. A spokesman for a prominent healthcare provider with hospitals in four Mexican resorts notes that, although alcohol and other substances are often a factor in incidents involving tourists, there is no policy requiring routine alcohol or drug testing, which is only carried out when medically relevant as determined by the treating physician, or at the request of the police.
“Test results are shared with insurance companies in the same way as other clinical information, however, no specific test is ever performed at the request of any other [party] besides the treating physician or relevant authorities,” the spokesman said.
A study in the US Journal of Trauma has indicated that up to 96 per cent of trauma centres do not test patients’ blood-alcohol levels, even where the patient may show signs of intoxication. If an insurer rejects a claim as a result of an alcohol exclusion cause, the clinic or hospital must seek payment direct from the patient, which is often problematic. In the US, 36 states have legislation permitting insurers to include alcohol exclusion clauses in policies. The remaining 14 states have legislated – under pressure from the US National Association of Insurance Commissioners – to make alcohol exclusion clauses illegal. Their motive is to reduce the burden on public healthcare represented by patients whose claim has been refused by their insurer.
Taking a tougher line by denying claims from clients who admit to having been ‘mildly inebriated’ is likely to be counter-effective by discouraging such clients from being fully transparent
Would travel insurers consider replacing alcohol exclusion clauses with an excess for alcohol-related claims? It seems unlikely. Given the cost of medical treatment abroad and, especially, of repatriation, such an excess might well have to run into five figures. That might deter sensible travellers from over-indulging on holiday – but then, it’s not the sensible clients who are the source of the problem, but the irresponsible ones. Arguably, the best insurers can do is to make their alcohol exclusion clauses clearer and more prominent, and perhaps to work more closely with the broader travel industry to educate travellers of the risks involved in overdoing it on holiday.