Citing the cases of several Floridians, including a U.S. Congress member, denied life insurance coverage after they said they planned to travel abroad, Insurance Commissioner Kevin McCarty filed a complaint Wednesday against American General Life Insurance that seeks to suspend or even revoke the Houston-based company's license in Florida.
The 22-page complaint details how American General repeatedly refused to provide life insurance or limited the coverage based on an applicant's future travel plans.
The most high-profile case involved U.S. Rep. Debbie Wasserman Schultz, D-Pembroke Pines, who in 2005 asked American General to increase her current life insurance policy. She indicated on her application that she had future plans for international travel.
American General then called her husband, who said there was a possibility she would travel to Israel. That inquiry alone violated a state statute that prevents insurers from asking potential customers what their future travel plans might include.
Wasserman Schultz said in a statement she was glad regulators were "taking this extreme action" against American General. "(Americans') legal travel choices should not adversely impact our ability to purchase life insurance," she said.
Although American General is an arm of global insurance giant American International Group, or AIG, the company is a small player in Florida, writing less than 1 percent of the state's life insurance policies.
But there could be a larger message being sent to the rest of the industry. This is the first time Florida has sought to suspend a company for violating the state's Freedom to Travel statute.
"I'm sure other insurers writing these lines of business will be very interested in the outcome of this case," said Tom Zutell, a spokesman for McCarty's office.
American General has 21 days to ask for an administrative hearing.
AIG spokesman Michael Arcaro said the company intends to fully comply with regulators and with Florida law. "We have put in place policies, procedures and controls to ensure compliance with this and other applicable regulations," Arcaro said, "and we are continually looking for ways to enhance those measures."
Earlier this year, McCarty sought to stop Allstate from writing any new business in the state after regulators say the company failed to comply with subpoenas. An appeals court granted Allstate a stay.
"Seeking to suspend a company's license is not something we take lightly," said Office of Insurance Regulation general counsel Steve Parton.
"However, given that (American General's) actions are in clear violation of the law, the office is left with little choice. The office has warned American General in the past, but they have refused to change their practices."
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