New Jersey Examines Web-Based Travel Insurance Sales

The New Jersey Department of Banking and Insurance issued a bulletin stating that the opt-out sales process used for selling travel insurance by some web-based travel services companies would be considered unfair methods of competition.

The department issued Bulletin No. 16-02 (“Impermissibility of Opting Out of Purchase of or Automatic Enrollment in Travel Insurance”) on Feb. 16.

Acting Commissioner Richard J. Badolato said his department has reviewed the actions that several states have taken against certain companies offering web-based travel services that require consumers to opt-out of the purchase of travel insurance when booking flights.

Specifically, upon accessing some of these web-based travel services and making the flight selections, consumers were then asked to review the selections made, which automatically included the purchase of travel insurance. Consumers were required to affirmatively opt out if they wished to book the flight without purchasing travel insurance.

Badolato said states that have taken regulatory action or issued formal guidance to licensees have concluded that the opt-out sale process is an unfair method of competition and a deceptive trade practice and required that the practice be halted and that restitution be paid to consumers.

Badolato said the purpose of the bulletin is to advise that his department considers such opt-out or automatic enrollment practices to be unfair methods of competition and unfair or deceptive acts or practices in violation of N.J.S.A. 17:29B-4.

“We sent the notice to our regulated entities, namely insurers and producers. We would expect them to ensure compliance with this bulletin,” department spokesman Marshall McKnight said.