We often talk about insurance being a highly regulated industry, but we wonder if we have explained just how far those regulations go. The state must approve rates and forms, for example, but the state also lays out rules for how agencies, brokers and insurers deal with their customers.
Most other industries can look to general consumer protection laws for guidance on what they can and cannot say — think about the ads boasting that fruit juice blends can cure cancer. Usually regulators find out about these false claims when consumers complain.
With insurance, regulators will certainly listen to consumer complaints, but they will also go out looking for violations of the state’s long list of deadly and lesser deadly sins. And, enough complaints won’t just rack up the fines; they will also cost an individual or a company the privilege of doing business in that state.
In our last post, we were discussing the informational memorandum about sliding that the Florida Office of Insurance Regulation distributed to insurance companies and producers (the term for agents and brokers) in early February. Specifically, the OIR was talking about travel insurance; the memo was released at about the time the federal government lifted restrictions on travel to Cuba.
As soon as those barriers fell, travelers flocked to Havana. They also, it seems, flocked to travel insurance websites or agents to purchase coverage, only to discover later that a little something extra had been slipped in with their travel policy. What better time, really, to take advantage of consumers than when they are in a hurry to visit family or to buy Cuban cigars at comparatively low prices?
The memo describes a trick on insurance websites that other unscrupulous industries have, sadly, been successful with. We’ll explain what it is and why it violates trade practices in our next post.
Source: Florida Office of Insurance Regulation, “OIR-15-01M: Automatically charging consumers for ancillary travel insurance without consumers’ informed consent prohibited,” issued Feb. 3, 2015Share