First published in ITIJ 124, May 2011
Fine print is a necessary yet contentious part of the travel insurance package. Milan Korcok examines the complex nature of travel policies and asks what can be done to make them simpler
As travel insurance products, options, and add-ons proliferate, individual customers risk burial by an avalanche of fine print and application options. What started out several years ago as a relatively simple purchase has evolved into a Rubik’s Cube of contradictory clauses, eligibility categories, charts, tables, and definitions that defy comprehension and informed choice. Whatever happened to the KISS rule: Keep it simple, stupid?
With some certificates of insurance running to more than 40 densely-printed pages, and lists of exclusions exceeding the list of benefits, many customers are justifiably asking if they need a lawyer to buy travel insurance, while others are just saying: “To hell with it, I don’t have the time.”
You can take a horse to water …
The one universal admonition insurance companies and agents have always imposed on their clients was: Read your policy. That may have been possible when policies were three or four pages, but even then the admonition was no more serious than telling a 10-year-old headed for the playground to be careful crossing the street. Now, reading one’s policy is virtually impossible to do in one sitting, even if the reader could understand the legal language contortions that many certificates are still heir to. Although to be fair, many insurers are cleaning up their act and resorting to clearer, more colloquial language to explain the difference between a ‘stable’ and ‘unstable’ pre-existing condition, or why cancellation benefits will be invalidated if a customer cancels a trip because his mother-in-law inconveniently died of a pre-existing condition, or other such contingencies.
reading one’s policy is virtually impossible to do in one sitting, even if the reader could understand the legal language contortions that many certificates are still heir to
Generally, Brits are ahead of Americans and Canadians in their use of clear policy language. Still, the full policy certificates are long, the applications are burdened by a multiplicity of choices, and though they promise specific coverage benefits, each are held in check by the fine print. Consequently, the more benefits offered, the more fine print.
The British firm InsureandGo, which claims to be the UK’s largest direct travel insurer, lists a variety of single and multi-trip plans on its menu, each with Bronze, Silver, Gold and Platinum levels of coverage, and each with up to 50 discrete benefit items, some included in the base price, other add-ons priced independently, and each with maximum reimbursement levels and excess (deductible) limits listed. Among these listings are such exotic items as coverage of golf equipment, replacement of beach cash, prepaid green fees, piste closure, a £20,000 benefit for hiring media professionals to deal with the abduction of a child while on vacation, and a similar payout for ‘working with’ foreign police in case of some other family emergency. The notion of ‘working with’ foreign police suggests some ominous references.
One of America’s top selling travel insurance firms, Access America, a Mondial company, lists 17 different vacation and/or business plans on its website, each with differing levels of benefits and price ranges. Just one of these, the popular Deluxe Comprehensive Plan, covers 16 benefit categories and options, most dealing with trip cancellation and interruption/delay benefits, but also including $50,000 medical/dental cover, $1 million medical transport, as well as coverage of pre-existing medical conditions, all with some limitations described in a 32-page certificate of insurance. The premium for this plan, when applied to a 65-year old man travelling nine days on a prepaid trip valued at $10,000 is $889.00. This is a substantial sum (quite comparable to quotes offered by other insurers), not a negligible fee, and certainly worth shopping around to other insurers. But how does one get a really fair comparison?
The hopeful purchaser can repeat the shopping process with CSA, HTH, IMG, MH Ross, Travel Guard, Travel Safe, Travelex or a dozen others, each of which offer multiple varieties of coverage. But an entire day could be used up investigating each and comparing one to the other.
In Canada, Manulife, RBC, etfs, TIC, Travel Underwriters, Blue Cross, and several other nationally distributed plans offer a comparable range of services, all with medical benefits exceeding $1 million, and with varying eligibility criteria, pre-existing conditions requirements and access to some quite innovative options. One of these, the ‘bounce back’ feature, available from Manulife, covers the cost of sending a client home to attend to a family emergency, then bouncing them back to their vacation site after the emergency is taken care of. It’s becoming quite a popular benefit in other Canadian policies.
Moving with the times
It seems every year brings some new options, but with consequent limitations. When ‘Cancel for Any Reason’, or ‘Change of Mind’ policies first came out, the justification for them was well founded. Claims for cancelled or interrupted trips were often challenged by limitations buried in the fine print: For example, if weather, earthquake or volcanic eruption caused your carrier to cancel or delay your trip for at least, say, 30 days, you would recover your prepaid, non-refundable costs of that trip. If the delay involved less than 30 days, forget it. Or if you had to cancel or interrupt a trip because of the death of a family member, you could recover your prepaid, nonrefundable costs, unless that person died of a condition that pre-existed your purchase of insurance.
No wonder, then, that buying travel insurance can sometimes be more time-consuming than preparing one’s income tax return
‘Cancel for Any Reason’ was designed to cover such cancellations, or even trips you simply lost interest in. Except that most ‘Cancel for any Reason’ or ‘Change of Mind’ policies themselves had limitations on how much you could recover depending on when you cancelled. And some of these limitations also require a careful parsing of fine print to understand.
No wonder, then, that buying travel insurance can sometimes be more time-consuming than preparing one’s income tax return, or buying auto insurance, or even signing up for domestic PPO medical coverage, which is of far greater importance as it covers one’s entire family, 24/7, year after year.
Different plans for different purposes
In Canada, travel insurance is sold largely for its out-of-country medical benefits and less for trip cancellation than American plans, although it is possible to buy medical-emergency-only, or cancellation/interruption-only plans independently. Virtually all Canadian travel plans cover at least $1 million in medical emergency and repatriation benefits (some go to $5 million), while American plans cover only a small fraction of that in their vacation/leisure travel products. Canadian government health plans cover hardly any out-of-country emergency medical benefits, so as soon as Canadians leave the country they know they are going bare unless they buy private travel insurance. Consequently, more than 80 per cent of mature, travel-knowledgeable Canadians (and a similar proportion of Britons) buy travel insurance for out-of-country trips. Only about one third of American travellers do so, and only a small proportion of those buy specific medical travel insurance. It’s also worth noting, however, that since the medical emergency cover in these American vacation-leisure plans is kept low – often to $25,000 or occasionally to $50,000, the risk is small compared to the Canadian and British plans that cover medical emergencies into the millions of dollars or pounds.
The Canadian and British concentration on medical cover invokes the need for precise definitions of medical benefits as well as detailed explanations of exclusions and limitations that impact medical underwriting. Medical questions are commonplace in such policy applications (for example: ‘Have you in the past 12 months been prescribed four or more medications for …?’; ‘In the past six months have you required the use of home oxygen?’; ‘At any time during the past 12 months have you been diagnosed with or have you taken or been prescribed medication or received treatment for … a stroke or mini stroke, peripheral vascular disease, gastrointestinal bleeding, crohn’s disease, ulcerative colitis and/or obstruction of the bowel….etc?’). The wrong answers, or the wrong interpretation of the questions, can do a lot of damage.
The Travel Health Insurance Association of Canada (THIA), which represents insurers, assistance companies and related services, was originally pledged to write standardised definitions for terms such as ‘pre-existing condition’, ‘medical emergency’, and ‘medically stable’, for adoption by its member companies partly on the premise that such standardisation would simplify and uncomplicate the customer’s ability to compare plans. Several versions have been written, but individual companies have been reluctant to adopt them, and prefer their own interpretations of what certain words or phrases mean. Perhaps that provides greater risk mitigation for the individual insurers, but it’s not a great help to the client seeking to compare apples to apples.
The consequences of not understanding the fine print, or relying totally on cursory summaries of benefits, are not negligible. It’s often difficult for the purchaser to see the fine print before he signs up. It’s much easier for the customer to buy a pig in a poke and take a short cut generously offered by the selling agent: Fill in the dates of travel, destination, cost of the trip, enter your age – then Click for a Quote. After that, Click Here for a description of coverage (which takes you to an uninviting 32-page fine print legal booklet), or Buy Now. For many customers, that’s an easy choice.
The Get a Quote and/or Buy Now options are favored selling devices for the growing number of travel insurance sales aggregators fighting for position online. One of the largest of these, InsureMyTrip, for example, offers 212 plans in five categories from 20 vendors in an astonishing array of permutations and combinations: Trip cancellation, medical, air evacuation, flight accident, or a total all-inclusive package. For trip cancellation all you have to do is enter the trip cost, primary destination, departure dates, client’s age, state of residence and citizenship, and up comes a listing of 55 plans and comparative prices. Premium prices for the full package for a 65-year old New York man travelling to Paris for two weeks on a $10,000 trip, ranges from $1,606 to $468. That was easy. But explanations of what’s in the plans – and what isn’t – demands a little more work. Not all packages selected contain the same components, so a good deal of further research is still required.
Generally, Brits are ahead of Americans and Canadians in their use of clear policy language.
Virtually all plan aggregators we surveyed use this same selection and purchasing paradigm – varying the quality and content of the benefit summaries. Notably, few have prominent warnings that travel insurance has many exclusions and limitations, that it is intended for unforeseen emergency situations, that some of the benefits listed might be duplicated by prior insurance clients may already have (in homeowners or auto coverage, for example). And on some sites it is also difficult to find or access the full insurance certificates – even if one wanted to read them. But one thing common to most is their reliance on using price quotes as their leading sales inducement. As many travel insurance marketers believe: ‘Cheap insurance’ still sells. Even though what it sells may be the wrong thing, at the wrong time, to the wrong client.
Fine print not a safety net
Customers of travel insurance products are subject to conflicting forces tugging from opposite directions: At one end are marketers promising better coverage, higher payouts, fewer restrictions, andworry-free travel; at the other are claims administrators dealing with the realities of limits, exclusions, non-disclosures, pre-existing conditions, and the actual contracts signed off by insurer and customer. Only the fine print separates – or to take the positive approach – unites them.
But if customers don’t rely or refer to the fine print of an insurance contract, how can it be used as an enforcement tool? How can you force someone to read a 40-page document, which, even if clearly written, is deadly dull? The truth is you can’t. As one customer recently replied to a well-known travel insurance web blog: “I’m not a lawyer and I don’t have four to five hours to sit and study the fine print.”
Jill McCutcheon, a partner in the Toronto-based law firm Blaney McMurtry, and an expert in travel insurance law, contends that if an insurer is going to make an advertising claim, it should be able to substantiate the claim without relying on fine print to clarify it. She concludes that premium guarantees or major exclusions are important things customers need to know about, and they should not be covered only in the fine print.
The courts appear to agree. In a landmark Ontario Superior Court decision in 1999, Destination Travel, a travel insurance plan administrator, and underwriter Great West Life Assurance, was ordered to pay Betty Jull the costs of a hysterectomy performed in a Florida hospital. The insurer initially denied the claim asserting that the operation was not an emergency and that the treatment could have been delayed until the patient returned home, a condition common to all Canadian travel policies. However, the judge in this case ruled that though the client’s husband, who looked after insurance, admitted he did not read the policy, he had been influenced in his purchase by an advertisement which described the health plan as offering comprehensive medical coverage in the USA and the world – “Your ticket to worry free travel.” Mr Jull testified that when he contacted Destination, he was never advised that he would be obtaining ‘emergency only’ insurance, and neither the application form nor the rate sheet mentioned the emergency nature of the insurance.
The judge ruled that Mr Jull had a reasonable expectation of coverage on the basis of what he saw and stated: “If the policy is difficult to read or understand and if the insurer, either by its marketing practice or by giving its policy a misleading name, created or contributed to a reasonable expectation of coverage … the court may be justified in looking beyond the words of the contract and holding the insurer responsible for the insured’s reasonable expectation of coverage.”
A diversifying market
In its infancy, travel insurance was a relatively simple purchase. There were few bells and whistles, and plans simply disqualified pre-existing conditions (even stable ones) from their menu of benefits. People with medical conditions either took their chances with the no pre-exist policies, or avoided travel insurance altogether. But, with the travel market exploding as it has over the past two decades, insurers could not afford to sell only to the young and healthy and avoid those in less than perfect health – in effect, the bulk of the travelling population, particularly the increasingly mobile middle aged and senior demographic group. Unless products could be found for people in health normal for their age, including even the super elderly, whose conditions have been made controllable by the miracles of modern medicine, insurers just couldn’t compete.
Similarly, it was not enough to cover only medical emergencies. There were too many other disruptions that could potentially ruin a family’s finances if travel plans went awry. Now, with terrorism, revolt and civil disturbance occurring somewhere in the world every day, with pandemics expected almost annually, and with natural disasters able to incapacitate millions of travellers in the most distant locations, there needs to be a coverage product for every contingency – even for the 65-year-old former bypass patient bungy jumping off a bridge in Peru.
The Canadian and British concentration on medical cover invokes the need for precise definitions of medical benefits as well as detailed explanations of exclusions and limitations that impact medical underwriting
This leaves travel insurers with the difficult task of providing bespoke products to a growing and diversifying mass market: 1) under conditions the purchaser can fully understand and agree to, 2) in a manner the purchaser can process relatively quickly and confidently, 3) at a price the customer can afford, 4) without giving up the safeguards that underwriters will insist on.
Keeping it simple is not always easy. It takes work. But achieving simplicity may be a far better marketing tool than drowning the customer in choices – most of which aren’t what they need, or that they can’t understand.