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.
My parents are Indian citizens and they are visiting the U.S. They will be staying with me at my California address. Can I still buy Atlas America or VisitorSecure insurance for my parents? 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 someone's parents visiting from India and going to California as an example; however, this example is applicable to any international traveler visiting California.
Why am I getting this notice?
You are receiving that message simply because you are putting your California (CA) address.
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. Your parents are tourists to the United States and can tour anywhere in the U.S. In such a situation, the insurance is not subject to California jurisdiction.
Above all, think about this. If your parents were not eligible to buy the insurance while they are visiting you in CA, they would not even be allowed to buy it. The insurance company itself is putting this message. They would not put that kind of message themselves, if something wrong or fishy were going on you would learn of it through other sources.
Can I buy this insurance for my parents who are visiting me in California? Is it safe to do so?
You can absolutely buy Atlas America or VisitorSecure insurance for your visiting parents to California. Lots of customers routinely buy this insurance for their visiting parents who are visiting their son or daughter that resides in California.
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 on your visiting parents behalf or your parents can buy for themselves.
Will my parents be covered if they become sick or injured while in California?
If you buy this insurance and your parents become sick or injured while in California, they would still be covered as per the terms and conditions of the policy.
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 take a hypothetical example that health insurance must cover pre-existing conditions after you are already covered in the plan for 3 months. All domestic companies would have to obey that rule. However, they would not be willing to give the same insurance to tourists because they don't want to take the risk of insuring foreigners 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 just in case an insurance company licensed in a particular state goes bankrupt or is unable to pay legitimate claims,the insured people are not devastated. The state government can pay money from the fund.
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 compannies 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, Inbound plans, etc.), Sirius International (IMG plans such Visitors Care, Patriot America 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 tourists to USA. 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 list to get visitors 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 visitors insurance?
If you live in California and want to buy the insurance on behalf of your parents who are citizens of India and who permanently live in India, you visit our web site Insubuy.com whose server is in Virginia, if you have any questions and call our office in Texas, then we offer you 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 California government be responsible for this transaction? They should not be. And this is the case not just with one company, but all companies and you don't have a better choice.
But again, why is this insurance not subject to California jurisdiction?
As explained above, a tourist to the USA can roam around anywhere and not just stay in California. There is really no difference if such tourist stays in your house for 4 months in California or goes to different places everyday day, like Disney Land, Las Vegas, Grand Canyon, Niagara Falls, Orlando, Washington DC, New York City, all of which are located in different states. The insurance company has no reason to be licensed in every place you visit.
Lets take another example. You decide to go for a two-week tour to Europe and 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 to be. That is the same reason it should not be licensed in California. There is no difference.
Why are my parents not subject to California jurisdiction for insurance purposes?
Your parents are simply tourists to the USA.
Are they residents of CA? Do they work in CA? Do they have a driver's license in CA? Do they pay taxes in CA? Do they receive regular mail in CA? Do they own or rent a house or apartment in CA? Answers to most, if not all, of such questions is No. That is why they are not subject to CA jurisdiction for insurance purposes.
I am still not comfortable. What are the other options you have?
If you are still concerned about it, you can buy other visitors insurance plans that we have on this web site itself. However, they are also NOT subject to California government jurisdiction and NOT regulated by the California government. That is because visitors insurance has nothing to do locally with California. If other visitors insurance plans don't show a similar notice, it does not necessarily mean that they are licensed by the California government.
And of course, visitors insurance plans from India are NOT regulated by the California government either, but by the Government of India.