John Hancock Travel Insurance Pre-Departure Cancelation Class Action

This class action brings suit against three companies involved in travel insurance: John Hancock Insurance Agency, Inc., Starr Indemnity & Liability Company, and Seven Corners, Inc. The complaint alleges that they sold trip protection plans but did not offer appropriate pro-rata refunds when the trips were cancelled before they began.

The Nationwide Class for this action is all persons who, while in the US or as US residents, bought a single-trip travel insurance policy from the defendants in this case that included coverages for exclusively post-departure risks, who canceled the trip or had their trip canceled before departure, and who did not receive a refund for the part of the premium that paid for the exclusively post-departure coverages. A California Subclass has also been defined.

The complaint divides travel insurance into two categories of coverages:

• Pre-departure risks, including “the possibility that a traveler will lose pre-paid nonrefundable deposits or payments if a trip is canceled prior to departure…”
• Post-departure risks, including “interruption of a trip, medical or dental emergencies during a trip, and lost, stolen or damaged baggage.”

The complaint states, “By its nature, this second category of coverages—exclusively for post-departure risks—is insurance coverage providing coverage for travel related perils that can only arise after travel is underway.”

The plaintiffs in this case, Kevin and Lourdes Isaacson, bought a single-trip travel insurance policy on a trip they planned to take to the Philippines. The policy was “distributed by John Hancock … underwritten by Starr and administered by Seven Corners.” The companies offer different policies with different levels of coverage, including Bronze, Silver, and Gold. The complaint says, “Typically, the more perils covered, the more expensive is the gross premium for all the policy coverages combined within a single plan.”

It also asserts that the companies “can readily identify the pro rata share of the gross premium which is attributable to each bundled policy benefit purchased by each insured under that person’s specific plan, including those relating solely to post[-]departure benefits.”

The companies’ policies don’t specify what they will do in the event that a policyholder cancels a trip before the departure date, the complaint says.

It quotes the findings in an earlier court case as saying, “if an insurer assumes no risk in a contract for insurance, then the insurer has suffered no bargained for detriment, and in the absence of that consideration the insured’s premium must be returned.”

It also quotes the American Academy of Actuaries Travel Insurance Task Force’s 2018 report, which says that “if a policy includes only benefits that cover post[-]departure exposures (e.g., trip interruption, medical), these is no risk exposure between the policy purchase date and the departure date. Consequently, no premium should be earned for the pre-departure period.”

Philippines eventually canceled the Isaacsons’ flight because of the Covid-19 pandemic. This meant the cancellation of their trip. Seven Corners has refused to refund to them any portion of the premium.

In such instances, the complaint claims, the companies “do not provide any consideration in return for the portion of the gross premium connected with post-departure perils, which [the companies] always require be paid in advance of travel.” The companies should therefore return the portion of the premium that was to pay for the post-departure coverages, it says.

Article Type: Lawsuit
Topic: Insurance
Tags: Failure To Pay For Refund, Insurance, Travel Insurance