If you’re planning to travel, for business or pleasure, outside the confines of the Good Ole U S of A, you may be exploring some of the insurance implications of your trip. For example, there is insurance to reimburse you for certain travel interruption expenses, and for your lost luggage, if you rent a car in Milan, or get sick in Bangkok. But you may not be thinking about your life insurance. To be sure, you don’t necessarily need to worry about policies you already own (we’ll skip the whole discussion as to whether or not would trigger the “act of war” clause). But what about purchasing a new policy in anticipation of an overseas jaunt?
Not too long ago, some folks planning a trip to Israel applied for life insurance, and were turned down.
Now, it does happen that folks are declined for life insurance: because of poor health, or dangerous hobbies, or because they’re crack-dealers, for example. The Israel-bound applicants, however, were apparently healthy, boringly employed, law-abiding citizens – who just happened to be traveling to a demonstrably dangerous part of the world.
Could have been Iraq, or Venezuela, or perhaps Malaysia. Happened to be Israel.
And so they filed a formal complaint with the Georgia Department of Insurance (because that’s where they all live); the Department, and the General Assembly, intervened on their behalf:
“Recently, legislation was introduced …to prohibit underwriting for life insurance based on an applicant’s…past or proposed future travel to the State of Israel.”
So what, you may ask.
Insurers look at these kinds of issues through the lens of risk. Just as health insurance coverage passes through the filter of “medical necessity,” life insurance underwriting encompasses risk management elements, as well. An underwriter categorizes potential insureds according to how likely it is that the company will collect $100 in premium, and then pay out $100,000 in benefits. Do that too often, and you could be talking some serious money.
And if you’re planning a trip to North Korea or Syria, then it would be understandable that most carriers would decline to issue you a policy. Why? Because the risk is very great, and the premium (proportionately) is small. They don’t really care if you’re black or white, Jewish or Christian, Democrat or Republican. An underwriter never knows any of this. Nor does he care. All he knows is that, if he approves the policy and you get blown up, he’s going to have a heck of a time explaining that decision to his boss.
So why is it that these same principles don’t apply to folks traveling to Israel? Certainly, most folks who go are there are not blown up. But some are; and it’s much more likely for a visitor to Israel to become a terror victim than someone traveling to, oh, St Thomas.
And yet, the Georgia Department of Insurance and members of the legislature have determined that basic underwriting principles are irrelevant when a group of people complain about their result. And thus, we see bills such as HB 1062, which prohibits insurers from applying these principles to folks on their way to the Holy Land.
It is a form of affirmative action, which actually contradicts the Department’s own statement that:
“Making or permitting any unfair discrimination between individuals of the same class, same policy amount, and equal expectation of life…” [emphasis added]
So what will they say when a group of missionaries planning a trip to Thailand are declined?
The bill is still pending, thus rendering the Insurance Commissioner’s admonition moot. So far.
Henry Stern, LUTCF is an independent insurance agent in Dayton, OH. A licensed Continuing Education instructor for Ohio and Kentucky, he has well over 20 years of experience in “the biz.” He blogs every day (or so it seems) at InsureBlog.