Sarah Brodie, Policy Adviser for travel insurance, sets out the facts on how travel insurers have been helping customers during this unprecedented time.
This most unprecedented year that, according to the Transport Select Committee report in the summer, has seen a staggering 97% fall in air travel, and travel insurers making record payouts to customers whose plans have been ruined by the pandemic, has also seen the scope and role of travel insurance very much under the spotlight. With this has come some inaccurate commentary on how travel insurers have been supporting their customers, most recently in the Sunday Times, where accusations that insurers made up rules as they went along could not be further from the truth.
Travel insurers expect to pay out £275 million to customers whose travel plans have been ruined by COVID-19. This will be a record amount arising from a single cause, easily greater than the last major disruption – the 2010 Icelandic volcanic ash cloud. Through a series of pledges, ABI member travel insurers have been giving extra help and support to customers throughout the pandemic, for example by automatically extending cover for those delayed in returning to the UK.
Few would not recognise the importance of travel insurance. Its core purpose is to protect travellers from the potentially ruinous cost of needing emergency medical treatment overseas, the cost of which can be more than the value of your home: £240,000 to treat the heart problems of a UK traveller in the US; £89,000 to pay for treating a heart attack in Turkey for example. Before the pandemic travel insurers were paying out the equivalent of £570,000 every day in medical claims.
That of course was in pre-Covid days. This year the priority for thousands of would be travellers has been to get refunds or compensation for cancelled or disrupted travel arrangements. For many it has not been clear what their legal rights are, and from whom they should be claiming from. Some mis informed comments that travel insurers should be the first port of call has added to the confusion.
Travel insurers work closely with customers to signpost them to where compensation may be received for cancelled transport, holidays or an inability to travel abroad. For example, under EU regulations.
Cancellation cover is typically priced to fill in the gaps only when other consumer protections do not apply. Insurers do not want to charge customers for insurance cover that duplicates the refund protections that travel operators, airlines and credit card providers have a legal duty to provide.
Travel insurance, like most of types of cover, is designed to cover unforeseen events. New policies bought or renewed since COVID-19 was declared a pandemic are likely to exclude cancellation cover due to Coronavirus as it was a known risk when the policy was taken out. If policies were to cover cancellation due to known risks like Covid their cost would rise, so leading to some risking travelling without insurance.
It will of course take time for people to have the confidence to travel overseas. But whatever our travel patterns will be in the future, travel insurers will continue to focus on delivering on what customers most want through competitively priced policies.
For advice on travel insurance and COVID-19, go to our travel insurance page on the Covid-19 Hub.