Wisconsin Adopts Model Travel Insurance Act

By: Judd Genda & Amy Harriman | Axley Brynelson, LLP

In the pandemic era, travel insurance has become just as essential to travel as packing a toothbrush. Travel insurance generally covers the loss of luggage, trip cancellation or delays, and medical emergencies. According to Forbes Magazine, travel insurance sales have increased by 53% in recent years due to the pandemic. This increase in demand for travel insurance products has led many states, including Wisconsin, to revamp their insurance statutes.

On December 3, 2021, Governor Tony Evers signed 2021 Wisconsin Act 111 into law (the "Act"). The Act adopts the Model Travel Insurance Act adopted by the National Association of Insurance Commissioners (NAIC) in 2018. Seventeen (17) other states have adopted this model act, and several other states are considering such legislation in their current legislative sessions.

The PIAW lobbied in favor of this legislation for several reasons. First, the Act creates a framework for regulating travel insurance and related products. The Act classifies travel insurance as an inland marine line of insurance for purposes of form and rate filings. However, if the travel insurance policy covers sickness, accident, disability, or death occurring during travel, either exclusively or in conjunction with related coverages of emergency evacuation services, then the policy may be filed as either an accident and health product or as an inland marine product.

The Act creates two pathways for consumers to purchase travel insurance products. The first is through a licensed insurance agent, and the second is through a travel agent. By distinguishing these two groups, the Act was also able to distinguish the duties and responsibilities of each group. A travel agent is often in a position to sell travel insurance to their clients, but the travel agent is not licensed to sell insurance products. Therefore, under the Act, travel agents may provide information, process applications, and other non-licensable activities. Travel agents may not evaluate or interpret technical terms or benefits under a plan, hold themselves out as an insurer or an insurance expert, or provide other licensable activities.

Under this law, travel agents may work under the producer's license. By doing so, the travel agent is required to conform to certain insurance regulations under Chapter 601 of the Wisconsin Statutes. The carriers are then responsible for ensuring the travel agent's compliance with state regulations. This ensures that those who offer and disseminate travel insurance products will be regulated like insurance agents. The Act modernizes Wisconsin's travel insurance law to address the contemporary nature of how consumers bundle travel services and travel insurance together while also protecting consumers from buying unnecessary insurance products.

The Act also distinguishes between travel insurance and a travel protection plan. A travel protection plan combines travel insurance, travel assistance services, and cancellation fee waivers. Under the Act, there are certain requirements to provide this combination of benefits, including detailed disclosure requirements. Travel protection plans have become more prevalent in the pandemic era because the added benefits associated with these plans provide greater protection to consumers from pandemic-related costs. Now, those who sell these travel protection plans will be required to meet certain disclosures, which will add transparency to these transactions.

Another reason the PIAW supported this legislation is that the Act prioritizes consumers. The Act requires certain disclosures regarding plans, policies, and exclusions; prohibits opt-out provisions which require consumers to deselect coverage when purchasing a trip; and prohibits certain unfair marketing practices such as requiring certain coverage when purchasing a trip.

Overall, the Act provides additional consumer protections while providing the travel insurance industry with a workable regulatory structure.