After several years of refusing to issue life insurance to people who travel to Israel, several insurance companies, including Manulife Financial Corp. and Sun Life Financial Inc., have lifted their travel restrictions to that country.

But Gaza, the Golan Heights and, in most instances, the West Bank, are often still cited as excluded areas. This remains a concern for financial advisors and their clients because Jerusalem’s “old city” — the location of many important religious sites for Christians, Jews and Muslims — is situated in the West Bank.

“The reinsurers are going to review what’s going on,” says David Brown, a partner with Al G. Brown and Associates in Toronto. “They may not exclude Jerusalem for certain underwriting decisions.”

One reinsurer, the Canadian operations of Munich Reinsurance Co. , has reviewed its coverage for travel to Israel and is including Jerusalem — including the old city and Jerusalem West.

“As such, insurance companies dealing with Munich Re can, at standard rates, offer their advisors and clients a solution that meets the needs for most of the travel to Israel,” says Helene Michaud, Munich Re’s marketing director in Toronto.

Until the other reinsurers come out with more specifics, client applications will be considered on an individual basis, Brown says.

Reinsurers play a key role because they provide insurance to insurers. The former operate in many countries, while the latter operate locally. That allows reinsurers to spread the risk more widely, says Tim Fitzpatrick, president of CoVirt Inc. , a Toronto-based company that provides Web-based insurance administrative services.

Advisors and their clients are looking for competitive rates, he says. But reinsurers factor in the perceived risks that could adversely affect the overall profitability of their businesses. If insurers want to offer policies to people travelling to areas perceived to be of high risk by the reinsurers, they will be asked to charge higher premiums.

However, Ami Maishlish, a veteran insurance researcher based in Toronto, says there is no verifiable actuarial basis for the exclusions.

“More Canadian tourists have died in Mexico than in Israel during the past two years,” he says. “Israel is one of the most modern countries in the world. It has more doctors per capita, hospital facilities and a sophisticated level of trauma care. You have a better chance of surviving a car accident in Israel than you do in Toronto.”

The exceptions carved out by reinsurers reflect a lack of knowledge of geography and what’s going on in those areas, Maishlish says.

Gaza is not even part of Israel, he says. “It’s under the jurisdiction of the Palestinian Authority. It was once occupied by Israel, but Israel withdrew six months ago. You cannot cross as a tourist from Israel to the Gaza Strip or vice versa.”

The Golan Heights was captured from Syria during the six-week war in 1967. Says Maishlish: “There is zero terrorist activity there.”

That leaves Jerusalem. Fitzpatrick has received the following notice from a reinsurer: “We have made modifications to our foreign travel guidelines and provided them to our clients at the end of February. Jerusalem is covered for the area that is not in the West Bank. Some eastern parts of Jerusalem are in the West Bank.”

This statement reflects the problem perfectly, says Maishlish. “Due to the geographical layout of Jerusalem, unless you want to take complicated and lengthy detours, you would travel through the ‘eastern’ part of the city — the older part — in order to get from one side of the new city to the other,” he says.

An unaware traveller to Israel could face the risk of having his or her policy voided.

“The problem is geographical,” confirms Brown. “The reinsurers have to clarify the geographical territory that is covered or excluded.”

Meanwhile, the insurers are taking a case-by-case approach.

“Travel ratings have relaxed over the past few months, and most short-duration travel to countries such as Israel can be considered for regular rates — depending on the location and purpose of the visit,” says Jasmine Mangalaseril, media relations officer with Manulife in Waterloo, Ont.

“Each application is reviewed on a case-by-case basis,” she says. “However, the general rule at present is that expected travel to Jerusalem would not, on its own, result in a denial of coverage.”

DISCUSS PLANS

Manulife advises applicants to discuss their plans with their insurance advisors to review their insurance options, Mangalaseril says.

@page_break@Sun Life shares a similar view. “Our practices in this area are consistent with the insurance industry in Canada,” says Susan Jantzi, media relations manager in Waterloo. “We encourage advisors to talk to our underwriters directly about any areas in which they have questions.”

In the U.S., this debate over insurance policy exclusions has found its way into several state legislatures, as well as into the U.S. House of Representatives. After the Sept. 11, 2001, terrorist attacks, Congress passed the Terrorist Risk Insurance Act, which provides for federal government reimbursement of insurance companies that suffer catastrophic losses due to acts of terrorism.

Debbie Wasserman Shultz, a Florida Democrat in the House of Representatives, succeeded in getting Congress to include provisions that would provide “life insurance fairness for travellers” in a revised version of the act, which currently is up for renewal.

As a result of the provision, insurers would have to establish premiums based on risk rather than deny applications outright.

“This is a big step forward for Americans who want to travel freely,” Wasserman Schulz said in a press release this past November. “It sends a message to the world that American citizens and businesses will not allow Osama bin Laden and the rest of the world to dictate where we travel.”

However, the legislation still has not been passed. U.S. insurers may have to concede to the proposed provision if they want the Terrorist Risk Insurance Act to be renewed. Meanwhile, they will closely monitor travel advisories put out by the U.S. State Department.

Canadian insurers follow the same practice with the federal Department of Foreign Affairs.

The recent shift by Canadian insurers toward insuring travel to Israel may ward off legislative efforts similar to those in the U.S. But insurance advisors say the present exclusions — especially the one concerning coverage of travel to the West Bank — need to be clarified. IE