New Jersey Issues Bulletin on Web-Based Travel Insurance Sales

February 24, 2016

The New Jersey Department of Banking and Insurance issued a bulletin stating that the opt-out sales process used for selling travel insurance by some web-based travel services companies would be considered unfair methods of competition.

The department issued Bulletin No. 16-02 (“Impermissibility of Opting Out of Purchase of or Automatic Enrollment in Travel Insurance”) on Feb. 16, addressed to all insurers authorized or admitted to transact business in New Jersey and all licensed insurance producers.

Acting Commissioner Richard J. Badolato said in the bulletin that his department has reviewed the actions that several states have taken against certain companies offering web-based travel services that require consumers to opt-out of the purchase of travel insurance when booking flights.

Specifically, upon accessing some of these web-based travel services, consumers could search flights by selecting a destination and dates of travel. After selecting “Search Now,” consumers were asked to choose a departing and return flight.

Badolato said that after making the flight selection, consumers were to review the selections made, which automatically included the purchase of travel insurance. Consumers were required to affirmatively opt out of the purchase of travel insurance if they wished to book the flight without purchasing travel insurance.

Consumers who did not opt out, i.e. who did not de-select the travel insurance, were automatically enrolled and the cost of the travel insurance was included in the total purchase price.

Badolato said states that have taken regulatory action or issued formal guidance to licensees have concluded that the opt-out sale process is an unfair method of competition and a deceptive trade practice and required that the practice be halted and that restitution be paid to consumers.

Badolato said the purpose of the bulletin is to advise that his department considers such opt-out or automatic enrollment practices to be unfair methods of competition and unfair or deceptive acts or practices in violation of N .J .S.A. 17:29B-4.

“We sent the notice to our regulated entities, namely insurers and producers. We would expect them to ensure compliance with this bulletin,” department spokesman Marshall McKnight said. He said the amount of restitution due to the consumers would depend on the facts of each case.


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