February 19, 2013

Department of Insurance reaches settlement with company over travel insurance

Consumers charged for travel insurance without permission

Jefferson City, Mo. - The Missouri Department of Insurance announced today that Missouri consumers who bought travel insurance from Virginia Surety Company or through Cheap Caribbean, one of its contracted agencies, may be entitled to a refund.

A joint market conduct investigation between the Missouri Department of Insurance and the Minnesota Department of Commerce into Virginia Surety found that the company violated numerous state laws and regulations by routinely requiring consumers to affirmatively "opt-out" of buying premium travel insurance policies.

"Insurance companies need to know that using technology to deceive Missourians violates consumer protection laws," said John M. Huff, director of the Missouri Department of Insurance. "Consumer protection is our top priority, and they must be protected from companies that use misleading gimmicks to sell their products."

The settlement says Virginia Surety will refund $140,000 to Missourians who purchased travel insurance from the company through Cheap Caribbean from January 1, 2007 to October 31, 2012. Consumers booking vacation packages on Cheap Caribbean's website had to uncheck the box for travel insurance to "opt-out" of purchasing it. Bypassing this step automatically enrolled consumers into travel insurance policies. Virginia Surety will notify consumers who are entitled to a refund. Any unclaimed refunds will be reported to the unclaimed property division of the Missouri State Treasurer.

In addition to consumer refunds, the company will also cease to sell its travel insurance products in Missouri for two years, pay any unpaid taxes to the state and pay a $100,000 fine to the Missouri State School Fund.

Market conduct exams and investigations allow the Department of Insurance to review an insurance company's practices regarding the treatment of policyholders. This includes the way premium rates are charged, how claims are handled and other responsibilities under state law. Reviews can result in refunds for consumers, fines and corrections in business practices, as well as other remedies.

Since the beginning of 2009, Market Conduct enforcement actions have generated nearly $15 million in payments from insurance companies. The money goes toward refunds for consumers, General Revenue and the Missouri State School Fund.

Consumers with complaints or questions about their insurance company can call the department's Insurance Consumer Hotline at 800-726-7390 or visit insurance.mo.gov.