Travel agents are not insurance agents, but after years of
negotiations, 46 of 50 states have now adopted regulations that enable travel
agents to sell policies under an umbrella license held by the travel insurance
Several years ago, insurers and the U.S. Travel Insurance
Association (USTIA) proposed regulations to take the licensing burden off
travel advisers and shift it to insurers, who carry the burden of educating the
advisers and keeping records of those who sell their policies.
The advisers, in turn, are required to direct clients to the
insurer to answer other-than-basic questions about policies.
Jason Schreier, CEO of April Travel Protection, said that
today, most states have adopted the reform, though a handful still require
advisers to be individually licensed to sell insurance.
Advisers, he said, "should definitely make sure that
they reach out to their insurance partner and make sure they have the most
up-to-date information on licensing. And don't assume that one insurance
partner, one underwriter, will have the same licensing requirements as another
The licensing requirements come as the National Association
of Insurance Commissioners (NAIC) and the National Conference of Insurance
Legislators (NCOIL) are considering new model acts that states could adopt with
regard to travel insurance regulations. (Insurance is regulated at the state,
not the federal, level.)
John Fielding, a lawyer with Steptoe & Johnson who has
been working with the USTIA on the issue, said NCOIL's model act, adopted at
the beginning of last year, became the basis for NAIC's act, which is up for
membership approval in November.
"Once that is done at the NAIC level, then both the
legislators will have acted and the regulators will have acted, and we're
hoping that the states will then move to adopt this as a law in their state,"
Several states have adopted laws identical or similar to the
NCOIL and NAIC models, Fielding said, and the hope is that more states will take
action in 2019. While the full model act under consideration by the NAIC deals
with a number of issues of interest to insurance companies, such as regulations
that govern bundled products and premium taxes, the portions dealing with
travel agent licensing have already been adopted by some 46 states.
Of the remaining states, Fielding said, New York and Hawaii
have not taken any action with respect to licensing reform, Washington's
regulation framework has not been fully adopted, and Iowa does not require licensure
for limited lines travel insurance.
Prior to the regulations, Fielding said, an adviser had to
be licensed as an insurance agent in order to sell travel policies. Under the
new approach, travel advisers are licensed under the larger umbrella license of
an insurance company. The new approach is considered a win.
"It's a big deal, and this really lowers that
[licensing] burden greatly without doing any harm to consumers," Fielding
Beth Godlin, president of Aon Affinity Travel Practice and a
member of the USTIA Board of Directors, said that if all 50 states were to
adopt model acts similar to the one the NAIC recommends, the repercussions
would be different for each insurer.
"I don't think it means an enormous change, but it's
going to be different by carrier," Godlin said.
Some newer entrants, such as Travel MedEvac Insurance, built
their companies from the ground up to be compliant under the new regulations,
said MedEvac's founding partner Jim Labelle.
"At the end of the day," Labelle said, "I
think this protects travel agents as much as it adds another level of making
sure they're complying regulatory-wise."