While applying for Tokio Marine HCC - MIS Group insurance plans, I get the following notice:
CALIFORNIA RESIDENTS SPECIAL NOTICE:
- THE INSURANCE POLICY THAT YOU ARE APPLYING TO PURCHASE IS BEING ISSUED BY AN INSURER THAT IS NOT LICENSED BY THE STATE OF CALIFORNIA. THESE COMPANIES ARE CALLED "NONADMITTED" OR "SURPLUS LINE" INSURERS.
- THE INSURER IS NOT SUBJECT TO THE FINANCIAL SOLVENCY REGULATION AND ENFORCEMENT THAT APPLY TO CALIFORNIA LICENSED INSURERS.
- THE INSURER DOES NOT PARTICIPATE IN ANY OF THE INSURANCE GUARANTEE FUNDS CREATED BY CALIFORNIA LAW. THEREFORE, THESE FUNDS WILL NOT PAY YOUR CLAIMS OR PROTECT YOUR ASSETS IF THE INSURER BECOMES INSOLVENT AND IS UNABLE TO MAKE PAYMENTS AS PROMISED.
- THE INSURER SHOULD BE LICENSED EITHER AS A FOREIGN INSURER IN ANOTHER STATE IN THE UNITED STATES OR AS A NON-UNITED STATES (ALIEN) INSURER. YOU SHOULD ASK QUESTIONS OF YOUR INSURANCE AGENT, BROKER, OR "SURPLUS LINE" BROKER OR CONTACT THE CALIFORNIA DEPARTMENT OF INSURANCE AT THE FOLLOWING TOLL-FREE TELEPHONE NUMBER 1-800-927-4357. ASK WHETHER OR NOT THE INSURER IS LICENSED AS A FOREIGN OR NON-UNITED STATES (ALIEN) INSURER AND FOR ADDITIONAL INFORMATION ABOUT THE INSURER. YOU MAY ALSO CONTACT THE NAIC'S INTERNET WEB SITE AT WWW.NAIC.ORG.
- FOREIGN INSURERS SHOULD BE LICENSED BY A STATE IN THE UNITED STATES AND YOU MAY CONTACT THAT STATE'S DEPARTMENT OF INSURANCE TO OBTAIN MORE INFORMATION ABOUT THAT INSURER.
- FOR NON-UNITED STATES (ALIEN) INSURERS, THE INSURER SHOULD BE LICENSED BY A COUNTRY OUTSIDE OF THE UNITED STATES AND SHOULD BE ON THE NAIC'S INTERNATIONAL INSURERS DEPARTMENT (IID) LISTING OF APPROVED NONADMITTED NON-UNITED STATES INSURERS. ASK YOUR AGENT, BROKER, OR "SURPLUS LINE" BROKER TO OBTAIN MORE INFORMATION ABOUT THAT INSURER.
- CALIFORNIA MAINTAINS A LIST OF APPROVED SURPLUS LINE INSURERS. ASK YOUR AGENT OR BROKER IF THE INSURER IS ON THAT LIST, OR VIEW THAT LIST AT THE INTERNET WEB SITE OF THE CALIFORNIA DEPARTMENT OF INSURANCE: www.insurance.ca.gov.
- IF YOU, AS THE APPLICANT, REQUIRED THAT THE INSURANCE POLICY YOU HAVE PURCHASED BE BOUND IMMEDIATELY, EITHER BECAUSE EXISTING COVERAGE WAS GOING TO LAPSE WITHIN TWO BUSINESS DAYS OR BECAUSE YOU WERE REQUIRED TO HAVE COVERAGE WITHIN TWO BUSINESS DAYS, AND YOU DID NOT RECEIVE THIS DISCLOSURE FORM AND A REQUEST FOR YOUR SIGNATURE UNTIL AFTER COVERAGE BECAME EFFECTIVE, YOU HAVE THE RIGHT TO CANCEL THIS POLICY WITHIN FIVE DAYS OF RECEIVING THIS DISCLOSURE. IF YOU CANCEL COVERAGE, THE PREMIUM WILL BE PRORATED AND ANY BROKER'S FEE CHARGED FOR THIS INSURANCE WILL BE RETURNED TO YOU.
I am a resident of California but I do not need the coverage in California or anywhere in the US. I am traveling overseas and I need the coverage only when I am traveling outside the US. Can I still buy Atlas International insurance? Could you please explain the meaning of this notice?
The complete answer to this notice is quite complicated, but we have tried to explain to the best of our abilities in the simplest way possible. The following questions/answers use examples of someone traveling from California to a location outside the US. However, these examples are applicable to any international traveler traveling outside his/her home country and outside the US.
When and for whom is this notice applicable?
This notice is applicable when all three conditions are true:
- The assured has a home country of the United States.
- The assured has a mailing state of California.
- The assured indicates that they are a resident of California.
If you meet all three conditions, then the notice is applicable to you.
Why am I getting this notice?
You are receiving the message simply because you put your California (CA) address and you indicated that you are a resident of California.
All it is saying is that the insurance you are buying is not subject to the California government jurisdiction and the California government does not regulate it. In such a situation, you don't need the coverage in the US and the insurance is not subject to California jurisdiction.
Above all, think about this, if you were not eligible to buy the insurance while you are visiting overseas, you would not be allowed to buy it. The insurance company itself is putting this message as a notification. They would not put that kind of message if something wrong or fishy were occurring.
Can I buy this insurance to cover travel to Europe? Is it safe to do so?
You can absolutely buy Atlas International insurance while visiting overseas. Many of our customers routinely buy this insurance for their travel abroad.
This notice just means that if you are a California resident and you want to buy the insurance for yourself to use in California, you may not be eligible to buy it. You can certainly buy the insurance coverage for overseas use.
Will I be covered if I become sick or get injured while in California?
No. The insurance plan you are purchasing is not meant for coverage in the US.
What insurance is subject to California jurisdiction?
The United States is not united for insurance purposes. (For many other purposes as well such as driving rules, alcohol rules, marriage rules, etc.) Insurance business in each state is controlled by the Department of Insurance in that state. Therefore, the Department of Insurance in California would regulate California business.
What exactly is CA business? If you are a resident of California, you buy the insurance from a company domiciled in California, the agent your purchased from is licensed in California, and you will use the insurance in California, it is clearly a Californian business. For example, a U.S. citizen who lives in Fremont, CA buys Blue Cross of California insurance (or any domestic company) from an agent in San Jose, CA, with the intent to use the insurance while living in California, that is very clearly a Californian business and the government of California has jurisdiction over it. They are licensed by the California government, called "admitted" companies. When you start deviating from this simple and clear case, it starts becoming more and more of a gray area.
Each state has their own minimum rules that all the insurance companies must meet in order to do business in that state. Let's use a hypothetical example that health insurance must cover pre-existing conditions immediately. All domestic companies would have to obey that rule. However, they would not be willing to give the same insurance to people traveling to foreign countries because they don't want to take the risk of insuring in foreign countries and end up covering their pre-existing conditions.
What is the insurance guarantee fund and how does that help?
Each state government maintains an insurance guarantee fund in case an insurance company licensed in a particular state declares bankruptcy or is unable to pay legitimate claims. The state government can pay money from the guarantee fund is to ensure that the insured people are not devastated in such situations.
This notice says that this insurance plan is not subject to the jurisdiction of California Department of Insurance and therefore, if the insurance company is unable to pay the claims because of insolvency, the California Department will not be paying for it.
Please read the FAQ below to read more about the insurance carrier, Lloyd's.
What are surplus lines companies and why should I buy the insurance from them?
The insurance companies are licensed to do business in a particular state to provide the insurance to residents of a particular state. As described above, each of these companies have to provide the minimum coverage as mandated by the state. These are called domestic health insurance companies such as Aetna, Cigna, United HealthCare, Blue Cross Blue Shield, etc.; they are considered "admitted" or "licensed" by the particular state.
Surplus lines insurance companies are able to take customers whom regular domestic health insurance companies cannot insure, they are not subject to all the conditions of the particular state department of insurance. The National Association of Insurance Commissioners (NAIC) maintains a list of eligible surplus lines carriers who they have determined to be reasonable and stable companies. Lloyd's (Atlas plans, Liaison plans, etc.), Sirius International (IMG plans such Patriot International etc.) are included in the list of such eligible surplus lines companies. Please note that NAIC maintains such a list for the protection of their own residents and not really for people traveling to foreign countries. However, most of such companies provide insurance to high risk U.S. residents, U.S. residents traveling abroad as well as visitors to the U.S., you can rely on such a list to obtain travel insurance from a good company.
Can you give me the information about the insurance carrier?
Lloyd's of London is the world's oldest and largest insurance organization. Lloyd's is a society of underwriting syndicates called underwriters. The people at Lloyd's pride themselves in knowing they have never defaulted on a legitimate claim. This unique organization has withstood war and peace, depressions, recessions, and every catastrophe produced by nature or by man over the last three centuries. Lloyd's annual premium volume exceeds $36 billion with over one third of that amount produced in the United States.
Lloyd's is in fact an approved surplus line carrier in California.
Even during financial crisis and bad economy, they have paid all eligible claims and never had to seek any government help.
What is the jurisdiction of international travel insurance?
Let's assume that you live in California, want coverage for a trip to Germany and you are a citizen of Canada. You look for coverage on our web site Insubuy.com whose server is in Virginia and you call our office in Texas with questions, then we suggest insurance from Tokio Marine HCC - MIS Group (for example) who is located in Indiana, who provides insurance from Lloyd's which is based in London, UK.
What jurisdiction will be applicable? There is no clear answer. In that case, why would the Californian government be responsible for this transaction? They should not be responsible. This is the same for all such companies.
But again, why is this insurance not subject to California jurisdiction?
Let's say you decide to take a two-week tour of Europe and you visit 10 different countries such as UK, France, Germany, Italy, Spain, Switzerland, Netherlands, Belgium, Austria, Portugal. Should the insurance company be licensed in every country you visit? No. There is no reason for them to be licensed everywhere. That is the same reason it should not be licensed in California. There is no difference.
I am still not comfortable. What are the other options you have?
If you are still concerned about the notice, you can buy other international travel medical insurance plans that we have on this web site. However, they are also NOT subject to California government jurisdiction and NOT regulated by the California government. International travel medical insurance has nothing to do locally with California. If other international travel medical insurance plans don't show a similar notice, it does not necessarily mean that they are licensed by the California government.