A new report has suggested a large number of travel insurance providers in Canada are not offering fair solutions to their customers.
In an internal report for insurance regulators, which was obtained and published by Postmedia News, there is a concern that travel insurance policies in Canada are sold without the customer needing to fill out medical questionnaires. It also finds that insurers are overcomplicating policies with jargon that may not give consumers the best concept of what they are buying.
As a consequence, policyholders are often left without proper coverage.
“Current practices do not appear to meet this objective (of providing enough information for consumers to make an informed choice about policies) and, as such, do not treat customers fairly,” the report by the Canadian Council of Insurance Regulators read.
Based on the findings, the regulators are working on new recommendations to ensure travel insurers give customers the best correct policies.
“[Our group] is actively working with other regulators in Canada to address consumer concerns about travel insurance products sold locally and nationally,” said Chris Carter, deputy superintendent of supervision at BC’s Financial Institutions Commission (FICOM).
The group is targeting reforms specifically for travel insurance sold to customers traveling outside Canada.
Companies have also been harming themselves. The report finds that 95% of approved policies were offered without a company checking properly if an applicant had a medical condition that would rule them out of coverage.
“The working group considers this to be an exceedingly high automatic acceptance rate and is surprised so few applicants have to undergo medical examinations during the underwriting process,” the report observed, comparing the situation with applicants for life and health insurance.”
“[The automatic approval] may give a false sense of security among consumers or create unrealistic expectations,” the report suggested.