SEATTLE — Attorney General Bob Ferguson recently filed a lawsuit against travel insurance company Allianz over its discriminatory practice of categorically denying insurance claims for Washingtonians who had to cancel or reschedule their travel plans because of mental health events.
Allianz sells travel insurance policies to consumers to protect them from suffering travel-related losses in the event they have to cancel or postpone their trip. The cost of these policies have ranged from $6 to more than $1,700. Ferguson’s investigation found that Allianz policies include an exclusion for “mental or nervous health disorders” and their related physical complications that disrupt travel. Allianz fails to adequately disclose the exclusion to consumers. Ferguson asserts that the exclusion is discriminatory under Washington state law.
Between 2014 and the start of the Attorney General’s investigation in August 2019, Allianz denied 485 claims from Washingtonians who had to cancel or change their travel plans for conditions ranging from Alzheimer’s diagnoses to hospitalization for severe depression to a family member’s attempted suicide. Allianz denied the claims even when policyholders provided letters from physicians or hospital records. Allianz continues to employ its mental health exclusion.
Ferguson asserts that Allianz’s mental health exclusion violates the Washington Law Against Discrimination (WLAD), the Washington Insurance Code, and the Consumer Protection Act (CPA), which prohibit unfair discrimination on the basis of disability in the insurance market.
Mental health disorders are considered disabilities under the WLAD.
“Even after hearing from my Civil Rights Division, Allianz continues to illegally discriminate against Washingtonians,” Ferguson said. “We will stand up for all Washingtonians with disabilities, including those experiencing mental health challenges. We will stop this illegal conduct, and hold insurance companies that don’t play by the rules accountable.”
Ferguson filed the lawsuit in King County Superior Court. He is pursuing restitution for those whose claims were denied and civil penalties. In addition, the lawsuit seeks to bar Allianz from including any clause in its Washington policies that exclude coverage for mental health disorders.
Hundreds of Washingtonians suffered harm due to Allianz’s discriminatory practice
The Attorney General’s Office’s Wing Luke Civil Rights Division began an investigation into Allianz’s practice of excluding coverage for those who experience mental health conditions in 2019, after hearing from a Washingtonian whose claim for travel reimbursement was denied.
The investigation uncovered that, between January of 2014 and August of 2019, Allianz denied 485 claims from Washingtonians whose travel was interrupted due to a mental health event.
Examples of denials
A Wenatchee couple, J.S. and R.S., who purchased airline tickets and a $42 insurance policy before the husband was diagnosed with Alzheimer’s disease. After the diagnosis, their physician recommended they limit their travel as unfamiliar surroundings could impact his cognitive abilities and exacerbate his anxiety. After they canceled an upcoming trip, Allianz denied the couple’s claim for the $250 cost of their airline tickets, even after they provided the company with a letter from their doctor explaining why the couple could not travel.
J.L., a Vancouver resident who purchased a plane ticket for his 9-year-old son to travel to Washington to spend time with him over the summer. The man had not seen his son in about five years, and he used his tax refund to pay for the ticket. After purchasing the ticket and a $27 travel insurance policy, his son was diagnosed with schizophrenia and bipolar disorder, and prescribed several medications. His son’s doctor recommended that the boy not travel until he could acclimate to his medications. Allianz denied the father’s claim, despite the fact that he included his son’s medical records with his supporting paperwork. The man could not afford to pay for a new plane ticket once his son was medically cleared to travel.
M.R. and D.R. of Olympia, who travelled to San Diego for their son’s wedding, and purchased a $57 travel insurance policy. Shortly before the wedding, their son attempted suicide and was hospitalized for several days where he was further diagnosed with a depressive disorder. Following these events, the wedding was cancelled, and the couple adjusted their flight plans to fly back to Washington with their son, where he checked into a treatment facility. When the couple filed a claim with Allianz for the $250 cost of changing their flights, they included copies of their son’s hospital records. Allianz denied the claim.
Allianz’s policy is unlawful and discriminatory
Ferguson asserts Allianz’s policy of denying coverage for travel losses due to mental health disorders is discriminatory. Allianz unfairly discriminates against people with mental health disorders because their claims are denied when their condition prevents their travel, while claims are paid for those whose physical ailments disrupt their plans.
It also violates the state Insurance Code. To exclude claims from certain protected classes of people, an insurer must demonstrate both a significant statistical difference in their risk or exposure to cover the claims, and that the exclusion is not unfair.
The Attorney General’s Office’s investigation discovered that Allianz did not perform a statistical analysis to show whether paying the claims significantly increased its risk. In fact, Allianz attempted to statistically justify the exclusion only after Ferguson began his investigation. Allianz claimed that removing the exemption would increase its risk and increase the cost of all policies, despite the fact that the 485 denied claims represent a fraction of the more than 2.2 million travel insurance policies it sold in Washington between 2014 and 2019.
Allianz deceived Washingtonians by failing to adequately disclose its discriminatory policy
Allianz violated the CPA by failing to adequately disclose the exclusion, despite the company’s pledge in its code of conduct that it strives to be “fair and transparent with our customers about our products and services, including their limitations.”
Mention of the exclusion is difficult to find on its website unless a customer is specifically searching for it. The mental health exclusion is also not mentioned on its site where a reasonable customer would expect it to be.
For example, on a page titled “What Does Travel Insurance Cover?” Allianz specifically mentions about a dozen events its policies do not cover — ranging from normal pregnancy to terrorist events — but does not mention travel interruptions caused by mental health disorders.
In a discussion on whether a customer needs travel insurance even though they have health insurance, Allianz mentions mental health conditions without noting the exclusion, implying they are covered by its travel insurance. Allianz points out that some health insurers do not cover urgent care for physical or mental health conditions, further stating, “That’s why buying travel insurance is so important … because it ‘can help fill any gaps in domestic health insurance coverage.’”
These and other omissions are likely to deceive a reasonable consumer into believing that travel interruptions due to mental health disorders are covered under Allianz’s policies, Ferguson asserts.
Moreover, Allianz lied to at least one customer. A Mercer Island traveler specifically asked Allianz whether their travel policies cover mental health related events, and was told that they would. After purchasing a policy and traveling to attend the birth of her grandchild, she had to change her return flight by four days after her son experienced a psychotic episode back in Washington. Allianz denied her $313 claim under the company’s mental health exclusion.
Lawsuit seeks restitution for impacted Washingtonians and corporate reforms
The lawsuit seeks to permanently bar Allianz from including the “mental or nervous health” exclusion in its policies in the future. Ferguson is also seeking restitution for those whose claims were denied, in addition to civil penalties and the costs of bringing the case.
Assistant Attorneys General Neal Luna and Ashley McDowell, Investigator Courtney Harmon and Legal Assistant Allie Lard are handling the case for Washington.
If your travel insurance claim has been denied because of a mental or nervous health disorder, we want to hear from you. Contact the Wing Luke Civil Rights Division by emailing firstname.lastname@example.org or call our Civil Rights Division at 1-833-660-4877, and select Option 4.