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December 15, 2005 Thursday
Miami Herald
By Frank Davies
WASHINGTON - When Jacob Solomon applied for extra life insurance, he was rejected. The reason: As executive vice president of the Greater Miami Jewish Federation, he takes trips to Israel.
In the eyes of some insurance companies, that makes him an unacceptable risk.
U.S. Rep. Debbie Wasserman Schultz, a Broward Democrat, experienced a similar rejection in March by just saying that she might travel to Israel. But the days of such denials may be over.
VOTE THIS WEEK
Congress is expected to vote this week on legislation, sponsored by Wasserman Shultz, that would prevent insurers from denying an applicant life insurance based on where he or she travels.
A similar move is underway in Tallahassee.
''I'm concerned that people who travel for religious or cultural reasons are facing discrimination for their beliefs,'' said Kevin McCarty, Florida's insurance commissioner.
McCarty has directed insurance companies writing policies in the state not to ask questions about past or future travel, and is drafting state legislation to ban the use of travel as a factor in writing a policy. A hearing on the issue is scheduled Friday in Tallahassee. Those who travel to Israel are not the only people being shunned by insurers.
`DART-BOARD ANALYSIS'
Joe Norton, an AIG spokesman, said it was ''standard industry practice'' to deny life insurance based on where a person might travel. Insurance companies are constantly assessing the risks, he added, and ``countries drop on and off the list all the time.''
According to Wasserman Schultz, Israel's intentional death rate is 11 per 100,000 -- compared to 17 per 100,000 in the United States.
''This has happened to so many people, based on just the possibility of travel,'' Wasserman Schultz said. ``The insurance companies are relying on a dart-board analysis of the risks, but by extension it's terrorists who are affecting these decisions. That should not be.''
INDUSTRY OPPOSITION
The insurance industry disagrees. Frank Keating, the former Oklahoma governor and CEO of the American Council of Life Insurers, warned that ``requiring insurers to offer coverage when an applicant is planning travel to a country beset by an epidemic or a civil war makes no sense.''
Wasserman Schultz gained support for her legislation from Reps. Ileana Ros-Lehtinen, a Miami Republican, and Robert Wexler, a Boca Raton Democrat, who make frequent trips to the Middle East. Rep. Joseph Crowley, a Democrat whose New York City district includes many Colombians, also signed on.
''We got support from all over the philosophical spectrum,'' said Wasserman Schultz, who added that her provision covers lawful travel -- not to Cuba or North Korea, two countries to where travel is illegal.
Her amendment was included in the Terrorism Risk Insurance Act passed by the House, which includes a federal backstop for terrorism insurance. Favored by the industry, along with builders and investors, the measure renews a program that would provide federal assistance if property and casualty losses exceed $50 million in a Sept. 11-style attack.
The Senate version does not include the travel provision, so House and Senate negotiators will decide, probably this week, if it survives final passage.
The insurance industry has fought the provision.
''Companies use many factors, including travel, and we oppose any legislation that restricts coverage,'' said Whit Cornman, spokesman for the Life Insurers group.
McCarty said that in Florida, so far, the insurance industry hasn't provided ''actuarial justification'' to demonstrate that intended travel is a legitimate reason not to write a policy. Without that analysis, using travel to deny coverage violates the state's unfair trade practices, he said.
McCarty is considering legislation to prohibit the use of travel as a factor, as Maryland and several other states have done.
TRADE PRACTICES
He also said some insurance representatives, including the Life Insurers group, argued that federal law was not necessary because of state regulation -- then opposed state rules.
'I find it unconscionable that certain industry representatives would insist that state law adequately protects our citizens, and then the same representatives challenge [our office] when we attempted to use the `unfair trade practices' provision to protect consumers from inappropriate discrimination,'' McCarty wrote Wasserman Schultz.
Cornman said he had not seen McCarty's complaint, adding that the industry supports the ''unfair trade practices'' laws already in place.
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