Q: Whatever happened to the push to deregulate travel insurance licensing at the state level? I remember lots of publicity a few years ago about ASTA's effort to get each state's law changed so that travel agents would no longer need insurance licenses. Did that effort succeed? Can we sell travel insurance to anyone in every state without a license?A:
The travel insurance reform effort has succeeded beyond my wildest dreams. Travel agencies, tour operators and their employees no longer need insurance licenses in at least 41 states and the District of Columbia in order to sell travel insurance. As of a year ago, reform was also expected in at least four additional states: Connecticut, Massachusetts, South Carolina and Vermont.
I use the term "at least" because I could not find any compilation of state actions more recent than March 2016. At that time, efforts at reform were also underway in the remaining states: Hawaii, Idaho, Ohio, New York and Pennsylvania.
The effort in New York has not yet been successful. According to the website of the state's Department of Financial Services, travel agents need licenses, but there are no tests or continuing education requirements to obtain or maintain a license.
The new system is possible because states passed a new, uniform law called the Travel Insurance Model Act. Agencies can thank not only ASTA but also the USTOA and the U.S. Travel Insurance Association, all of which lobbied for the new law.
The system is not exactly deregulation because it makes travel insurance companies take over the supervisory, education and policing roles that states used to have. Nevertheless, it is a tremendous improvement over the patchwork of laws and licensing requirements that preceded it.
Under the new law, travel agents cannot "sell" insurance in the same sense that a life insurance salesperson can. Rather, you are limited to "offering and disseminating" policies offered by your travel insurance supplier and explaining the features and benefits using materials provided by the insurer.
So, you cannot "evaluate or interpret the technical terms, benefits and conditions of the offered travel insurance coverage," and you cannot "evaluate or provide advice concerning a prospective purchaser's existing insurance coverage." This is probably just as well, as the policies are quite hard to interpret, and you could be liable to the client if he relies on your mistaken advice.
One more thing: Cancellation fee waivers offered for sale by travel suppliers are not "insurance" within the meaning of any insurance law, so such sales are totally unregulated, which means you are free to evaluate and interpret them to clients.
Back to New York for a moment. Earlier this year, Financial Services enacted comprehensive new data-protection requirements that every licensee has to implement. The requirements are onerous and in some cases impossible to fulfill. For example, every licensed travel agency will need to adopt "due diligence processes used to evaluate the adequacy of cybersecurity practices of Third Party Service Providers," which would include your GDS vendor. The new rules will certainly make agencies think twice about selling insurance in New York in the future.
Like the seller of travel laws, the Travel Insurance Model Act applies to companies that sell to consumers in the state even if the agency has no office there. Once you are registered with an insurance provider under the model law, you can "offer and disseminate" to clients in every state where the model law has been adopted and your insurance provider is itself licensed.