(Editor’s Note: this post was originally published in April, 2020, at the height of the COVID-19 outbreak. Many months later, SafetyWing did in fact change their coverage position and agree to cover COVID-19. That is good, but it came too slow and too late in my opinion. I have preserved the below post for posterity so future readers can understand the position SafetyWing put me in at the start of the pandemic and why I continue to have a low opinion of the company).
As a digital nomad currently abroad, I’ve recently spent a lot of time trying to figure out how to make sure I am protected in the event I catch coronavirus.
Like many long-term location independent travelers, I buy nomad travel insurance through SafetyWing because it is a company that markets itself as “Insurance for Nomads, by Nomads.”
Sadly, SafetyWing has publicly stated its position is that it is withdrawing coronavirus coverage, effective last week, for insureds like me.
Here is how SafetyWing justifies their position on their website:
There has been a lot going on this past month, and I genuinely trusted SafetyWing as a brand, so until recently I honestly just took their coverage explanation at face value.
But this week, I sat down to figure out what coronavirus coverage was available on the market that I could buy going forward.
As I did that, I figured “maybe I should just take a quick look at my current SafetyWing policy just to see what it actually says.”
In my pre-blogging days I had a career as an attorney and, while that feels like a lifetime ago, I still know how to read a contract. (note: nothing in this post is legal advice – consult your lawyer if you need that).
And, boy oh boy, am I upset by what I found when I read my policy.
Over the course of the past 48 hours or so, as I have dug more and more into this, I have come to the following beliefs, which I will explain at length in this article:
- SafetyWing has implied on its website that its Nomad Insurance policies include a pandemic exclusion, but they do not. SafetyWing also publicly implies it cannot cover coronavirus because its hands are tied by the CDC’s travel recommendations, which is also not the case.
- SafetyWing bases its coverage position on a questionable reading of a narrow exclusion that is at best ambiguous in this situation, and the application of which has not been determined by a court of law.
- SafetyWing created a moral hazard that effectively encouraged some digital nomads to travel during the peak transmission period of the pandemic, potentially exposing themselves and others to the coronavirus.
- The cost to SafetyWing and Tokio Marine of covering coronavirus is probably not remotely as expensive as SafetyWing implies, and it really shouldn’t matter anyway as that is the point of insurance.
- SafetyWing now appears to me to be leveraging the situation they created into a marketing opportunity to extract more money out of customers by up-selling us on coronavirus coverage it should already be providing us.
- SafetyWing can and should reverse course by immediately clarifying that it will cover coronavirus for all its customers.
As you can probably tell, I’m pretty livid about this.
I gave SafetyWing my trust as a customer, and I even promoted them on my blog as an affiliate.
Now I feel likely SafetyWing has wrongly abandoned me and others in the middle of a global pandemic.
I’m writing this post in the hope that public pressure will encourage SafetyWing to do the right thing.
Because SafetyWing, you still have time to live up to the ideals you claim to be founded upon.
You still have time to provide the global safety net to our digital nomad community that you promised us.
And you still have time to prioritize people over profits.
So let’s break down why SafetyWing has lost my trust, and why I think SafetyWing should change course immediately:
SafetyWing Markets Itself as The Insurer That “Gets” Digital Nomads
Before we dive into the specifics of how SafetyWing responded to the pandemic, let’s take a step back and talk about what SafetyWing is and why I think digital nomads should hold them to a higher standard.
Central to the very identify of SafetyWing is the notion that SafetyWing is the one and only insurer who understands the special needs of digital nomads.
SafetyWing’s advertises itself as “Insurance for Nomads, by Nomads” and describes its mission on its homepage as follows:
People who are location independent fall between the cracks, without proper access to insurance or national safety nets. We know this because we are nomads ourselves.
Most of us nomads are used to brands and products that don’t really fit into our lifestyle, so SafetyWing’s entry into the market was understandably celebrated all around the digital nomad community.
I mean, it sure seemed as if we finally had an insurance brand who understood the needs of those of us who don’t have a traditional “home” and don’t live our lives under the established norms that underlie so much of the way the world works.
I believe that when a brand markets itself to as a friend of the digital nomad community, we must hold them to a higher standard when the community needs their help …
SafetyWing’s Policies Do NOT Have a Pandemic Exclusion (But You Wouldn’t Know it From Their Website)
By now you’ve probably heard in the media that many insurance companies started inserting explicit pandemic exclusions into policies after the 2002 SARS outbreak.
It is a practice so controversial that even Donald Trump has recently weighed in:
Trump addressed the issue in Friday’s two-hour coronavirus briefing at the White House, saying he “would like to see the insurance companies pay if they need to pay.” The president said there’s “an exclusion” for pandemics “in some cases,” but “in a lot of cases, I don’t see it.”Source: MarketWatch
God, you know things have gotten bad when I’m agreeing with Trump.
Anyway, one insurer who sometimes uses pandemic exclusions is Tokio Marine, the company worth roughly $33 billion that SafetyWing uses to underwrite its Nomad Insurance policies.
For example, here is a pandemic exclusion from a policy Tokio Marine sells under an Australian travel insurance brand:
So obviously if SafetyWing and Tokio Marine didn’t want to provide coverage during global pandemics, they definitely knew how to write a policy that would explicitly exclude pandemics.
And, honestly, for the past month I’ve personally been operating under the assumption that SafetyWing must have included a pandemic exclusion.
But then this week I finally read the policy itself.
So, is there a pandemic exclusion in SafetyWing’s Nomad Insurance?
As The Donald would say, “I don’t see it!”
Fun fact: the word “pandemic” does not appear even once in my 30-page-long SafetyWing/Tokio Marine policy.
Neither does the word “epidemic,” by the way.
But, boy oh boy, you sure wouldn’t know that from the way SafetyWing talks online.
Remember I started this article with a quote from the top of SafetyWing’s Coronavirus page that says travel medical insurance “generally won’t hold up in certain situations where there is a long term disease that requires long term treatment, or in this case a pandemic.”
Uhhhh … no, sorry, SafetyWing, the fact that we are in a pandemic means absolutely nothing under your own policy.
But this is far from the only place online SafetyWing’s marketing creates the impression that it does.
Here’s another example from further down on their Coronavirus page:
File away that bit about coronavirus coverage costing too much. I’ll come back to that later.
For now, let’s focus on the fact that you obviously don’t need a pandemic add-on when you never had a pandemic exclusion in the first place.
Yet again, SafetyWing is subtly leading us to the (wrong) impression that Nomad Insurance excludes pandemics.
Now, if you think that is bad, just wait until later in the post where I show how SafetyWing is now trying to pivot from that false impression into a marketing case for a new supposedly “pandemic-exclusion-free” product.
But, for now, let’s quickly take a look at SafetyWing and Tokio Marine’s convoluted reasoning for leaving digital nomads without coronavirus coverage:
SafetyWing and Tokio Marine Are Pointing to a Questionable and Ambiguous Exclusion
Ok, so if there isn’t a pandemic exclusion, then what the heck is SafetyWing basing its position on anyway then?
Basically, as I’ll show in this section, SafetyWing and Tokio Marine are pointing to a questionable exclusion and using it to effectively argue that digital nomads who want to maintain coronavirus coverage are required to go to the moon.
Ok, that’s not really a fair representation … but only because it doesn’t have to be the moon specifically.
Mars would work too.
Or that planet with those cute fuzzy creatures in Star Wars.
Or almost any planet in the universe, honestly.
The only planet where you can’t get coverage?
This is essentially their coverage position in a nutshell: depart Planet Earth by April 7 or we will deny you coronavirus coverage.
Why are they doing this?
Ok, this next part gets a little into the weeds, but bear with me:
Let’s look at the exclusion SafetyWing is pointing to, General Exclusion 43:
That exclusion says there will not be coverage for “[c]harges resulting from a disease outbreak in a country or location for which the U.S. Centers for Disease Control and Prevention (CDC) has issued a Level 3 Travel Warning if … within 10 days following the date the warning is issued you have failed to depart the country or location.“
In other words, if the CDC says “don’t go to Country X because there is a disease outbreak,” and you are currently in Country X, you need to get out within 10 days.
That exclusion makes sense as a public policy matter – it is good to discourage people from traveling into Liberia in the middle of an Ebola outbreak, for example.
But, by its very nature, this exclusion inherently assumes the outbreak is localized and that it is in fact possible to avoid the outbreak by leaving.
Until last month, that was always true of every warning the CDC had issued in its entire history.
And, indeed, early in this crisis the CDC did issue localized warnings for places like China and Italy, and travelers had a chance to get out and maintain coronavirus coverage.
The problem is that General Exclusion 43 was clearly not written in a way to contemplate what happens if there is a global CDC travel alert (again, never happened before).
As we now know, on March 27 the CDC issued a “Global COVID-19 Pandemic Notice,” wherein the CDC advised “travelers avoid all nonessential international travel.”
SafetyWing and Tokio Marine have capitalized on that to try to turn General Exclusion 43 into a global pandemic exclusion (it’s not and never was).
SafetyWing’s position appears to be that, because that warning applies globally, anyone who fails to depart the globe within 10 days of March 27th loses their coronavirus coverage.
But, unless you can join the Space Force in record time, obviously it is not possible to depart Planet Earth on 10 days notice.
And this is the really key thing, because:
In situations where a rigid reading of a contract’s text would impose on a party an obligation that is impossible, courts often excuse the party who failed to do the impossible thing.
Besides the obvious impossibility issue, there are many other good reasons why I think a court could and should reject SafetyWing’s reading:
First, this was the first time in history that the CDC issued a global travel alert like this, so obviously it’s not the sort of situation that Exclusion 43 was originally drafted to deal with (again, this is NOT a pandemic exclusion – can’t emphasize that enough).
Second, public policy, which courts often consider in cases like this, weighs very heavily against SafetyWing’s interpretation (much more on moral hazard later).
Third, the legal burden of proving that an exclusion applies falls on SafetyWing and Tokio Marine – not the other way around. I question whether they can meet that burden for a bunch of other reasons I don’t have the space to explain here.
Lastly, because insurance contracts are often chock full of general exclusions that a good lawyer can twist to fit any situation, courts construe insurance coverage broadly and exclusions narrowly.
All of which means that SafetyWing and Tokio Marine should not get the benefit of the doubt here.
AT BEST, I think this is an ambiguous application of the exclusion that would require a court to weigh in.
And in situations like this, many states have laws that protect insureds by requiring insurers to err on the side of providing coverage until a court weighs in to clarify things.
There are also a whole host of laws that create strong financial penalties for insurers who get it wrong.
That is why it is truly shocking to me that SafetyWing is taking such a draconian hard line on this.
SafetyWing is playing with fire.
And it’s doing it in the middle of a global pandemic.
Which has real consequences …
SafetyWing Created Moral Hazard During a Pandemic
If you’re a digital nomad, expat, or long-term traveler who was abroad in mid-March 2020 when coronavirus swept across the world, you almost certainly had to face the following question:
Should I stay where I am or should I go “home”?
We all had to answer this question on the fly with less than ideal information go by.
SafetyWing’s response was less than ideal.
To their credit, they did offer to fly nomads home or to another country, but only if they did so by March 21st (meaning, this was not an option by the time of the CDC’s global alert).
I’m glad they covered those flights for people who chose this option.
But it also was their contractual obligation, so I’m not giving extra credit.
The problem is how SafetyWing treated those of us who didn’t want to fly home.
SafetyWing basically created a situation where many digital nomads felt pressure to fly home because of what SafetyWing was saying – even if they really didn’t want to, and even if it wasn’t the safest thing in their situation.
And, before you go knocking those of us who chose to stay put, consider that we had some VERY good reasons for staying:
First, many digital nomads don’t HAVE a home in the traditional sense.
That lack of a home is one of those defining features of the nomad lifestyle that the outside world doesn’t always totally understand – but that SafetyWing promised us as a community it does.
Second, flying “home” for many of us would have meant leaving places with fewer cases and flying directly INTO the raging epicenter of the global pandemic.
Many digital nomads that are from places like the United States, Italy, Spain, France, and the UK.
You know, some of the WORST countries in terms of the public health situation.
Third, public health officials all over the world were telling us that the #1 thing we could do to fight coronavirus was to stay where we were and shelter in place.
Mid-March 2020 was a very bad time to be traveling anywhere.
And remember how SafetyWing tries to take the moral high ground by saying “we have to adhere to the CDC (The U.S. Centers for Disease Control)’s travel recommendations“?
First off, no you don’t!!!!
The CDC doesn’t require you to do anything, and you and Tokio Marine are more than free to interpret your own policy in a way that protects your insureds.
Second, maybe let’s talk about what those recommendations actually say and why they were issued (hint: it wasn’t to encourage people to book a flight on Virgin Galactic’s spaceships).
The CDC’s global travel alert cautions against “all nonessential international travel.”
ALL nonessential international travel.
Which include things like flying across the world if its not essential that you do so.
Because, among other reasons, you know …. you could CONTRACT CORONAVIRUS OR SPREAD IT ALONG THE WAY.
The CDC’s warning against international travel explicitly warned of the risk of contracting the virus during the process of traveling:
you may be exposed to the virus while traveling—from sick persons at airports, or on airplanes, ships, trains, or buses.
In other words, if you get on a plane you might be exposing yourself to the virus.
And then you could spread it along your journey, or take it home with you!
If there was ever a case of moral hazard, this is it.
And the really sad thing is that none of this had to happen this way because …
SafetyWing Can Definitely Afford to Cover Coronavirus
Remember above how SafetyWing is basically asking for sympathy because covering coronavirus would supposedly be just too expensive for a travel insurance provider?
I don’t buy it.
First, off, WHO CARES if SafetyWing can turn a profit right now?
SafetyWing sure didn’t mind taking nearly $500 in premiums from me over the last year without paying for a single claim.
The entire point of insurance companies is to absorb risk for times like this.
Second, while I don’t know exactly what the underwriting cost of cornavirus is (I asked SafetyWing, they didn’t give a number), there is good reason to think it’s probably not actually that expensive in the scheme of things.
First, healthcare is much cheaper in most countries than in the United States (where my SafetyWing policy doesn’t apply for that express reason).
Second, many governments are providing some or all coronavirus treatment and testing for free as a public good already.
Third, in countries that do charge, the costs don’t seem at all out of line with the type of treatment travel insurers cover all the time.
For example, in Singapore severe cases of respiratory infection average about $5,000 USD in total treatment cost.
But not everyone will have a severe case, and insurance companies exist for the purpose of spreading that risk out.
Let’s use some generous assumptions to back into a conservative sense of underwriting costs.
First, let’s say that 70% of SafetyWing’s insureds will contract covid-19 (unlikely, but I am being conservative to prove a point).
Now remember that many cases of coronavirus are asymptomatic, and that many more involve only mild symptoms that can be treated at home.
So let’s assume that 5% of SafetyWing’s cases fall into that severe category. That’s almost certainly very conservative too given that hospitalization rates are closely tied to age. SafetyWing doesn’t sell to people over age 69, and it charges more for anyone over age 40.
Do some simple math and we can see that scary $5,000 Singapore hospital bill would come down to about $175 per SafetyWing insured.
Which is less than half of what I’ve paid SafetyWing in premiums in less than a year.
That is also a fraction of the cost of a last-minute flight home, which SafetyWing did cover.
And, sure, this is a rough guess at underwriting costs. You’d need to add in costs for milder cases, testing and things like administration.
As I said, I don’t know what the exact cost is to underwrite coronavirus coverage.
But I’m 100% positive it is well within Tokio Marine and SafetyWing’s financial capability to absorb the risk of coronavirus.
Here is why I am so darn sure:
SafetyWing is Now Trying to Up-sell Customers With a New “Pandemic-Exclusion Free” Product
Yeah, you read that right.
Last week, on the very same day that SafetyWing withdrew global coronavirus coverage for Nomad Insurance policyholders like me, they emailed us trying to get us to buy their new health insurance product – which they aggressively advertise as free of pandemic exclusions:
Their marketing is unmistakable: SafetyWing is going hard on its pandemic pitch.
Here is the Remote Health sales page:
“Would-be-funny-if-it-wasn’t-so-real” side note: see, that bird figured out a way to depart the Planet Earth, so maybe SafetyWing will cover it!
Anyway, look, normally I wouldn’t have a problem with SafetyWing advertising Remote Health’s lack of pandemic exclusions. That’s something people are looking for.
The issue is that they are marketing it by leading people into thinking their existing Nomad Insurance has a pandemic exclusion – WHICH IT DOES NOT.
I mean, just look at this graphic they sent out to their list:
Contrary to this misleading graphic, Nomad Insurance says nothing at all about COVID-19 or pandemics!
To be clear, there are reasons why many digital nomads truly do need general health insurance in addition to travel medical insurance.
For example, nomads need regular doctor visits, cancer screening, and all sorts of healthcare that isn’t of the emergency nature of travel medical insurance.
But contracting coronavirus abroad is absolutely an emergency situation that properly falls under the scope of travel medical insurance.
Just because SafetyWing might have to pay a lot of claims during a pandemic doesn’t mean those claims are invalid.
So, no thanks SafetyWing, I’ll pass on your new “pandemic-exclusion-free” insurance.
Because I already have a policy with you that is pandemic-exclusion-free.
Which is why it is time for SafetyWing and Tokio Marine to do the right thing …
SafetyWing Still Has Time to (Partially) Fix This.
SafetyWing can’t undo the moral hazard it created last month.
But it’s not too late for SafetyWing to do the right thing by the many nomads who are still abroad and currently being told they won’t receive coronavirus coverage.
Not every digital nomad has a spare $1,572 lying around to enroll in Remote Health.
And why the heck should they if they already have emergency medical coverage that really should apply here?
That is why SafetyWing and Tokio Marine can and should announce today that they will reverse course and provide coronavirus coverage for all Nomad Insurance customers.
There is no law that bars an insurer from providing too much coverage.
There is no law requiring an insurer to adopt policy interpretations that benefit themselves.
In fact, there are plenty of laws that require the opposite.
It’s time for SafetyWing to step up to the plate.
It’s time for SafetyWing to prove it really does stand with the digital nomad community.
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