Flight Risk

When Rabbi Mitchell Hurvitz bought life insurance from Lincoln Financial last year, the process was simple. He filled out an application and waited for the acceptance letter. In good health and not known for being much of a risk-taker, he received the $1.75 million coverage without a problem.

That wasn’t the case three years earlier.

Hurvitz, a father of four and a rabbi at Temple Sholom in Greenwich, was rejected for life insurance coverage in 2004 by AIG because of his plans to travel to Israel.

His trip to the Jewish homeland, which included planned visits to Jerusalem and Tel Aviv, posed a risk that disqualified him from coverage, AIG said.

“I was shocked that was the reason they were denying my coverage,” said the 42-year-old Hurvitz, who lives in Stamford. “I called the agent back to question the legality of it. I didn’t know it was possible for them to do that.”

It was then. It’s not now. In 2006, the state legislature passed a law banning the practice of denying life coverage or boosting premiums based on travel if the insurer has not shown evidence of a clear link between foreign travel and death rates.

Ten other states have adopted similar laws, and efforts to pass federal legislation based largely on the Connecticut law won approval in the U.S. House of Representatives last year before dying in the Senate. Lobbying by the insurance industry helped kill the measure.

Insurers argue that foreign travel is a sound category of risk classification, citing the U.S. State Department’s travel advisory list of 27 countries, including Israel, Pakistan, Iran and Iraq, which gives reasons why they are particularly dangerous or unstable. Those reasons justify denying coverage or raising premiums to cover the added risk, the industry says.

But the State Department’s advisory list isn’t based on statistical data, according to Tom Baker, an insurance risk classification expert and a former professor at the University of Connecticut insurance law center. In fact, certain countries on it, including Israel, are statistically safer than the United States.

“My understanding is that no company has demonstrated that there is actually greater risk,” Baker said. “My guess is that it won’t be possible. There isn’t a lot of data that could back up the claims.”

“It can be difficult to find statistical data that demonstrates real risk,” said Arnold Dicke, a member of the life products committee of the American Academy of Actuaries.

To show that real risk exists, Dicke said an insurance company would need to estimate the expected mortality cost if a person actually travels to the hazardous location. To do that, companies would have to rely on relevant historical data compiled by a local government or other sources of information about deaths due to civil strife or epidemics.

That data isn’t always available, however, and even if it was it wouldn’t always be an appropriate basis for setting underwriting requirements or premium rates, Dicke said. That’s because conditions during future travel may vary from what happened in the past.

While sound actuarial standards do allow “for the actuary to make inferences without specific demonstration” in special cases, Dicke said, the line between actual risk and perceived risk is not black and white.

AIG, TIAA-CREF, and TransAmerica were three companies identified in Connecticut that used travel considerations prior to 2006.

Officials from AIG and TIAA-CREF said their companies comply with Connecticut law but were vague on whether they factor in travel in underwriting. Both companies said they still cover people who travel abroad.

“Since the law passed, we immediately brought our policy into compliance with the requirement,” said Joe Newton, a spokesperson for AIG.

A representative from TransAmerica declined to be interviewed for the story.

After Hurvitz and others testified about the industry’s practice of underwriting based on travel plans, the Connecticut legislature voted unanimously to ban it.

Complaints ceased in Connecticut, and Hurvitz wasn’t asked about travel when he sought coverage. But complaints keep cropping up around the country.

“I get calls from people in other states who said they have experienced the same problems,” said Saud Anwar, a physician in South Windsor and president of the Pakistani American Public Affairs Committee.

Prior to 2006, Anwar was rejected for life insurance coverage by several companies because his travels to Pakistan were considered too risky. His wife and brother-in-law experienced similar problems.

Anwar said there needs to be a national effort to fix the problem, so all U.S. citizens receive the same protections that Connecticut residents now enjoy.

“It’s a quality-of-life issue,” Anwar said.

The National Association of Insurance Commissioners recently adapted guidelines similar to Connecticut’s law, with the hopes it will encourage other states to follow suit.

And Rep. Debbie Wasserman Schultz (D-Florida) has spearheaded the campaign for federal legislation. “Since states like Connecticut have started to take action on the issue, it increases the likelihood that it will get federal support,” said Jonathan Beeton, a spokesperson for Schultz.