It’s time we talked to you about travel insurance licensing. That’s right, we want to share our perspective on the topic and point out how far we have come.
In the past, licensing has been both a large expense and a burden for travel agencies and insurance providers alike. For the average travel agency with customers in just four states, it is currently estimated to cost over $5,000 annually in travel insurance licensing fees.1 That is a huge expense for most travel agents.
Fortunately ASTA & UStiA (United States Travel Insurance Association) have worked together to remedy this situation. The result is the NCOIL/NAIC Model Act, which shifts the licensing burden from the travel agent to the underwriter.
Even though there is still more to be done, there is a light at the end of the tunnel. In May of 2016, ASTA reported that the number of states who had adopted the new travel insurance standard was now at 42, plus the District of Columbia.2 Due to the reform, they estimated an average annual savings of over $9 million for the travel agency industry.3 Those are huge in terms of savings for the agent community.
For most agents in the 42 states that have adopted the new standard, getting a license is optional instead of mandatory. However, certain states have restrictions. So, it's always best to check with your travel insurer to see if licensing is necessary or not. In the meantime, ASTA and UStiA continue to lobby the states to only require travel agencies to be registered under the underwriter's license.
The Goal of Travel Insurance Reform
The travel industry is a vital piece of this country’s economy. According to the International Trade Administration, 1 out of every 18 Americans is employed either directly or indirectly through the travel or tourism related industry. Travel agents are a big part of that.
By removing the red tape, the reform would allow travel agents to better protect their clients, themselves, and their commissions. It would also mean agents would be able to sell travel insurance to all clients, regardless of where they live. With technology progressing, most agents are not just selling to people who live nearby or even in the same state.
This also makes for a better experience for your clients. It keeps the goods and services for their trip all under one roof. If you are currently one of those agents who is not offering insurance to clients outside of your state because the return on investment just isn’t there (believe me we get it), then the reform is helping you take care of that.
What Will Change for Travel Agents
We can’t say for certain when or if all states will adopt the reform. As of now, there isn’t a set date. Even if the states do adopt the reform, we can't be certain it will work the same way across all borders. We do know that we are making progress. We are hoping agents will no longer require licensing, eliminating the need to pay annual licensing fees or take written tests.
The way you sell travel insurance won’t change. You still won’t be a travel insurance expert, and we don't’ want you to pretend to be. It’s important to defer questions regarding coverage to us. We’ll be the insurance experts and you can be the travel expert (we’ll be sure to call you about our next trip to Barbados!).
Offering travel insurance and earning commission does not come without responsibility. Travel agents will still have required customer protections in place, but they won’t be as extensive as they once were when licensing was required. As a matter of fact, they’re quite simple. Knowing most agents, they won’t be a problem at all.
Here is what they'll look like:
- Short Training Video - You may have already seen this upon logging into your TravelSafe agent dashboard. It was a brief 5 minute video and it was easy!
- You mustn’t have a fraudulent or criminally dishonest background.
- Agree that either the travel insurance provider or yourself sends the customer terms of coverage and TravelSafe’s contact information.
- Know that the travel insurance provider maintains a registry of all travel agencies offering its products and the states where it is offering those products.
- Travel agent must avoid acting as a licensed insurance agent, which includes restricting the travel agent from providing a risk assessment or interpreting an insurance policy.
We have high hopes for travel insurance licensing reform and all of the effort ASTA and UStiA have put forth. It is one of the many reasons we continue as a proud member and supporter of both the U.S. Travel Insurance Association and ASTA.
Travel agents deserve to have fair access to the products and services that provide coverage and assistance to their clients while traveling. It will better benefit the agent and the traveler in the long run.
Sources: ASTA (2016) Working For You: Travel Insurance Reform Effort Enters Home Stretch