Allianz to pay $1.5M for denying mental health-related travel insurance claims
Because of the suit, the state’s insurance regulator ordered all travel insurers to remove mental health exclusions.
Allianz Global Assistance is paying $1.5 million to resolve a civil rights lawsuit for discriminating against 560 Washington state residents by denying travel insurance claims that were filed for mental and nervous health disorders, the state’s attorney general’s office reported.
The settlement, which covers claims filed from January 2014-February 2023, comes ahead of a trial that was set to begin on Jan. 17, 2024. The investigation into these denied claims started with a complaint to the attorney general’s office in 2019.
Because of the suit, the state’s insurance regulator ordered all travel insurers to remove mental health exclusions.
According to the attorney general’s office, Allianz’s “mental and nervous health disorder” exclusion was discriminatory. The state further alleged that the insurer did not adequately disclose the mental health exclusion.
“Allianz would accept a claim over a broken foot, but not a life-altering mental health diagnosis — that’s not fair, and it’s not lawful,” Washington Attorney General Bob Ferguson said in a release. “Mental health conditions are just as real and serious as physical conditions — and both have protection under the law.”
Mental health disorders are considered disabilities under the Washington Law Against Discrimination Act.
In addition to conflicting with state anti-discrimination laws, the exclusion was alleged to have violated the Washington Insurance Code and Consumer Protection Act, according to the attorney general’s office. Under the consumer protection law, an insurance company can exclude claims based on a disability if it can show that the exclusion is not unfair and that covering those claims would result in a significant difference in the company’s risk or exposure. The exclusions must be adequately disclosed to consumers when they are shopping for policies.
The attorney general’s office also claimed that Allianz did no statistical analysis to show whether covering mental health-related travel claims would increase policy costs or the company’s risk.
After the investigation into the denied claims began, Allianz ran an analysis and reported removing the exclusion would increase its risks and the cost of all policies. However, the state’s attorney general pointed out that the 560 denied claims accounted for a small percent of the 5.1 million travel insurance policies Allianz sold to Washington residents since 2014.
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