(Image via Consumer Federation of America)
There is a reported contagion spreading throughout Europe. It is not the coronavirus itself, but it is a phenomenon directly related to Covid. It is the reported behavior of some life insurance companies delaying or denying people life insurance coverage based on their having contracted Covid or on being suspected in some way of having contracted Covid.
In the United States, more than 25 million people have tested positive for the coronavirus as of this writing. In the face of these developments, the Consumer Federation of America has not waited for the disease of denials to spread to the United States.
The CFA has issued a letter to the National Association of Insurance Commissioners calling for a new model rule. Faced with the contagion spreading from Europe in which life insurance companies have denied claims and applications from people with Covid-related issues, the CFA is urging reasonable behavior from life insurers in the United States.
“We understand reasonable precautions are needed, but to harm COVID patients and their families again is unacceptable. State regulators need to step in and issue a rule to protect consumers from arbitrary insurance company practices. Transparency and reasonableness in underwriting must be the standard,” said J. Robert Hunter, CFA’s Director of Insurance and former Texas Insurance Commissioner, who is quoted by the CFA in its press release. Press release, Recovered COVID-19 Patients Facing New Life Insurance Hurdles in Europe, Protections Needed for American Consumers /
CFA Urges the National Association of Insurance Commissioners to Adopt Model Rule for Life Underwriters Denying Coverage to Applicants Who Had COVID-19; Group Calls on Insurers to Take Voluntary Action (February 1, 2021), https://consumerfed.org/press_release/recovered-covid-19-patients-facing-new-life-insurance-hurdles-in-europe-protections-needed-for-american-consumers/.
In issuing its request for a rule of reasonableness, the Consumer Federation of America is essentially asking that life insurance companies in the United States act in good faith. Dealing fairly with applicants and policyholders is the essence of good faith -- and the surest way to avoid the dreaded extracontractual risk of lawsuits for "bad faith."
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