Your trip insurance may not be worth the paper it’s written on
By Jim Gaines
Jessie Hall of Orlando always wanted to go to the Rose Bowl, and when she planned to go with her sister-in-law in December 2007, they built a flight and Carnival cruise to Mexico into the package. She booked through Legendary Journeys of Sarasota, which she’d used for previous trips. She also bought travel insurance recommended by the travel agency, the same coverage she’d bought before but never needed.
Turns out the insurance provider, Colorado-based Traveler Protection Services, wasn’t licensed to sell insurance in Florida. When Hall had knee problems and canceled her trip, she expected Traveler Protection Services to cover the $3,373 cost. More than two years later, she’s still waiting.
“They kept denying it and denying it and denying it. [Traveler Protection Services] finally went out of business,” says her daughter-in-law Debbie Hall, who has handled most of Jessie Hall’s paperwork.
In late 2008, the Halls complained to the state Office of Insurance Regulation, a division of the Department of Financial Services. All the state told them was to take it up with Legendary Journeys, and file suit if they were unsatisfied. So in 2009, they started swapping letters with Legendary Journeys. The company rejected reimbursement also, saying Jessie Hall’s knee problem was a pre-existing condition and not covered. Debbie Hall says that’s not true, and that Legendary Journeys wouldn’t look at the medical records, relying instead on the defunct insurer’s prior conclusion.
“Finally, here about three months ago, they sent her a letter saying they weren’t responsible, and they would give her a $1,000 travel credit,” Debbie Hall says. Jessie Hall is deciding what to do next.
Charles Scott, accounting manager for Legendary Journeys, says the Halls’ wrangle with the insurer isn’t the travel company’s fault. Legendary Journeys didn’t actually sell travel insurance, Scott says. So far as his company knew, the insurance they promoted was “perfectly fine in the state of Florida.”
“No one’s come back and given us a definite on that, from the state or from any other source,” he says.
Despite more than a decade in business, the travel agency didn’t know – according to Scott – that it was required to verify whether the product it pushed was legit.
Hundreds of complaints like Hall’s fill the files of the Office of Insurance Regulation alleging travel agencies promoting or selling bogus trip insurance. The insurance firms themselves aren’t licensed to do business here, or the agency that sells it isn’t licensed to do so in Florida.
Complaints surged in 2008 when the name Prime Travel Protection started popping up, says Nina Banister, spokesperson for the Department of Financial Services. But they also go back years.
In fall 2003, Don Filiault of Ormond Beach booked a $1,870 trip through Internet travel agency CruiseQuick of Plantation, and paid for insurance from Trip Assured, a Crossville, Tenn.-based firm run by Edward McKinley Johnson. But Filiault canceled when his mother suddenly became terminally ill.
“I think I was probably a pioneer in buying bogus travel insurance,” Filiault says.
CruiseQuick gave half his money back after his complaint, and after much back-and-forth agreed in April 2004 to repay the rest, he says.
Filiault contacted state officials to notify them of the scam. “I got basically no help from the state of Florida,” he says.
After six other states had ordered Trip Assured to stop doing business, Florida was “shamed” into doing the same, says Filiault.
Verifying the legitimacy of those insurance policies is the responsibility of the agencies that peddle it to consumers. “Their license is on the line whenever they fail to confirm that they are working with a licensed entity,” says Banister.
It’s the state’s duty, however, to supervise and regulate those transactions. It was former Florida insurance commissoner and state CFO Tom Gallagher’s job to watch out for travel insurance buyers from 2001 through 2006. Since then it’s been in the hands of current state CFO Alex Sink, who’s seeking the Democratic nomination for governor.
Gallagher did not return calls seeking comment. But Banister, who also served under Gallagher’s administration, says state investigators are going through 300 claims involving 20 travel agencies.
Before Filiault got taken, however, the state assured citizens phony insurance was being taken seriously. A 2003 press release from Gallagher’s office announced that the Pete Orr Act, written for health insurance fraud but applied to unlicensed insurance of all kinds, was “a giant step toward greater protections for Florida insurance consumers.” The press release states that since 2001 the state had shut down “14 entities and dozens of affiliates marketing unlicensed insurance products to Floridians. More than 50 insurance agents are facing disciplinary action, and several have already lost or surrendered their licenses.”
Banister says Florida is aggressive in pursuing travel agencies for unauthorized insurance sales.
“I would go back to saying that we are focused on getting … all of the valid claims paid,” she says. “We’re not aware of any other state that’s taking the action we are in getting claims paid.”
Barry Resnick of California, who says his mother lost nearly $6,000 in 2006 that Trip Assured should have paid for a canceled trip, expresses amazement that Florida took so many years to act.
“I said, ‘I can’t believe it. Who is sleeping at the wheel here?’” he says. “It was the same thing all over again: sold by the same travel agencies, the same unauthorized insurance. I couldn’t believe it. They didn’t learn their lesson. They just sold it again. It just amazed me that Florida continued to turn a blind eye.”
Florida is now doing a “great job” of investigating fake insurance policies, and Sink’s office should be commended, Resnick says. But had these cases been investigated five or six years ago, hundreds of consumers wouldn’t have lost thousands of dollars each.
“The administration before Alex Sink was the one that dropped the ball,” he says.
Many of the complaints about insurance that won’t pay claims go back to one man: Jerry Andrew Watson, whose last known address was in Arvada, Colorado. He was a cohort of McKinley in Trip Assured, and when that firm shut down, Watson took off to found Prime Travel Protection, Traveler Protection Services, Vacation Protection Services and Universal Assurance Group.
In March 2005, Sink’s office sent a letter to Best Price Cruises of Port St. Lucie, saying the state planned to issue a cease-and-desist order to stop the sale of policies from Prime Travel Protection. A letter naming many of Watson’s companies went out the same day to Legendary Journeys, and a similar one to Palm Coast Travel of Boca Raton. All the reasons were the same: those companies were not licensed to offer insurance here.
In March 2009, a cease-and-desist order went to Watson himself.
Filiault, who has followed Watson’s progress closely, says hundreds of Florida travel agents shilled for Watson’s policies. Many of them were honestly fooled, but lots of others kept pushing them long after problems became obvious, he says.
Chris Elliott of Winter Springs, author of the travel blog Elliott.org, says the state is about to file more cease-and-desist orders, this time against Legendary Journeys and Best Price Cruises.
Meanwhile, other Florida travel agencies that marketed Watson’s insurance aren’t happy about being linked to the scandal.
One of the firms that drew the most complaints for selling unlicensed insurance is Palm Coast Travel of Boca Raton. When Elliott started talking about Palm Coast on his blog, the company sued him and one of its unhappy customers, Peter Lay of California.
In its suit, Palm Coast Travel argues that when Elliott posted an inaccurate state news release, the firm’s reputation was damaged. When a corrected version was released, Elliott posted that, but Palm Coast Travel says he wasn’t quick enough. Elliott says the suit is merely an attempt to shut him up.
Palm Coast Travel owner Lee Smolinski also runs Smart Travel Group, Smartcruiser.com, Smart Cruiser Holdings and Tripsmart. Those companies are all named in a just-signed consent order in which Smolinski agrees to pay a $2,500 state fine, quit selling unlicensed insurance, reimburse or reinsure anyone who bought unauthorized insurance through his companies and pay all valid outstanding claims. It specifically requires Palm Coast to reimburse Lay $3,888.
Smolinski’s attorney, Daniel Newman of Miami, says the suit against Elliott will continue, and that accepting the consent order isn’t an admission of wrongdoing.
As those cease-and-desist orders go out, other purveyors of Watson’s insurance are rethinking their business plans. Legendary Journeys hasn’t promoted the policy that burned Hall since September 2008, Scott says.
“Because of the issue of travel insurance in general, we’ve entirely dropped it,” he says. The company now recommends that travelers use Google to find their own travel insurance. Legendary Journeys may be the first in the state to back away from the mess altogether – but Scott expects that most other Florida travel agencies will soon follow suit.