Travel Insurance Causing Woes For Airlines

Travel Insurance Causing Woes For Airlines

If you are planning to travel, be aware that your decision to purchase travel insurance may be more significant than you think. Specifically, recent news reports have brought to light two class action lawsuits that were recently filed against Delta and JetBlue with regard to the travel insurance purchased by their customers. The allegations within these lawsuits provide that JetBlue and Delta “aggressively push customers to add ‘travel protection’ to online ticket purchases for an additional fee. What the airlines don’t say, the suits claim, is that they’re getting a cut of the profits despite not being licensed to sell insurance.” See Erin Gilmore, JetBlue, Delta Receive Unlawful Kickbacks for Selling Travel Insurance, Class Actions Claim.  

The class action lawsuit filed against JetBlue is currently pending in the United States District Court for the Southern District of Florida. The allegations against JetBlue state in pertinent part as follows:

“JetBlue proceeds to conceal its financial motivation in pushing the product by disclaiming its role in the trip insurance policies being sold on its website. Specifically, below the marketing language is the following language: Recommended by AGA Service Company, the licensed producer and administrator of this plan. Terms, conditions and exclusions apply, learn more. Plan underwritten by Jefferson Insurance Company or BCS Insurance Company.” JetBlue’s website thus represents to the consumer that it is AGA Service Company, and not JetBlue, who is recommending the trip insurance and who is “the licensed producer” for the trip insurance policies. A “producer” is insurance parlance for an insurance agent or broker, i.e., the one who makes a commission on the sale of insurance. Thus, by stating that AGA Service Company is “the” producer, JetBlue represents that it is not acting as an agent or broker, i.e., it is not making a commission on sales of trip insurance policies.  In fact, JetBlue cannot sell insurance to the consumer (and thus cannot receive commissions on sales) because it is not licensed as an insurer or insurance agent in Florida or anywhere else. Like Florida, other states across the country prohibit the unlicensed sale or brokerage of insurance, including the receipt of commissions by people or entities without a license.”

There are numerous examples that the class action lawsuit points to demonstrating that JetBlue has engaged in unfair and deceptive trade practices, and further, that JetBlue has been unjustly enriched as a result of these deceptive practices. 

It will be interesting to see JetBlue and Delta’s response to these class action suits and whether such actions will be brought forth in other district courts in various states across the country. One thing is for certain, it is always important to read the fine lines when making any type of contractual decision; and further, that if you are purchasing trip insurance that you make sure you understand the coverage that is provided to you as well as who benefits from your purchase and whether they are legally entitled to do so.

Image courtesy of Unsplash.

Today's blog: Do you ever buy travel insurance before you hop on a plane? Well, airlines make a profit off this, even though they're not licensed to sell insurance - and they don't tell you about it.