Feb. 2—Allianz, the world’s largest insurance company, will pay out $1.5 million in damages, including approximately $800,000 to Washington residents whose claims it denied based on discriminatory policies, following a lawsuit brought by the state.
The company was found to have denied claims by 560 Washington residents for travel insurance policies based on a “Mental and Nervous Health Disorder” exclusion in its policies between January 2014 and February 2023.
Washington residents harmed by Allianz’s discrimination will receive full reimbursement for travel losses and the premiums, plus interest, according to a news release.
The company will also pay $700,000 for the cost of distributing the financial restitution and the costs of the Attorney General’s Office investigation and litigation.
An investigation by Washington Attorney General Bob Ferguson found that Allianz’s policy unfairly discriminated against people based on disability, and violated the state Insurance Code and Consumer Protection Act.
“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,” Ferguson said. “Mental health conditions are just as real and serious as physical conditions — and both have protection under the law.”
For an insurance company to legally exclude claims based on disability, the company is required to first demonstrate both a significant statistical difference in their risk or exposure to cover the claims, and that the exclusion is not unfair, according to the release.
Allianz did not adequately disclose to Washingtonians that its policy discriminated against customers based on mental health, according to the release, and did not perform any statistical analysis to show whether covering travel losses related to mental health disability would have increased policy costs or Allianz’s risk.
“In fact,” the report continues, “Allianz attempted to statistically justify the exclusion only after Ferguson began his investigation. Allianz claimed that removing the exemption would increase its risk and increase the cost of all policies, despite the fact that the 560 denied claims represent a tiny fraction of the 5.1 million travel insurance policies it sold in Washington since 2014.”
The Office of the Attorney General also reported that Allianz implemented the exclusion based on the stereotype that mental health conditions are difficult to verify.
Some of the Washington residents affected by the discriminatory claim denials included a Spokane couple who purchased travel insurance for a cruise before the husband was diagnosed with dementia. Despite the doctor’s claim, Allianz rejected the claim.
Others whose claims were wrongfully rejected included a Vancouver resident whose 9-year-old son was diagnosed with a bipolar condition and schizophrenia, disrupting the travel plans, a Tacoma resident who canceled a trip due to severe anxiety and a Seattle woman who cut a postgraduate trip short after experiencing multiple panic attacks.
The Office of Insurance Commissioner ordered all travel insurers to remove discriminatory mental health exclusions from their policies as a result of the lawsuit. Only then did Allianz change its policy.
Allianz will be subject to a binding court order preventing it from seeking approval from the OIC to use the discriminatory exclusion for three years.
Washington residents whose travel insurance claim was denied by Allianz between January 2014 and Feb. 15, 2023, can contact the Office of the Attorney General’s Luke Civil Rights Division by emailing travelinsurance@atg.wa.gov.
Sun may be contacted at rsun@lmtribune.com or on Twitter at @Rachel_M_Sun. This report is made in partnership with Northwest Public Broadcasting, the Lewiston Tribune and the Moscow-Pullman Daily News.
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