The disruption of Ryanair flights was one of the biggest shocks the airline industry experienced in 2017, however the collapse of Monarch Airlines arguably superseded this, with over 750,000 holiday bookings being cancelled.
Monarch’s demise was generally believed to caused by the dip in travel to particular destinations, following terrorist attacks on tourists in Egypt and Tunisia, as well as political unrest in Turkey, according to GlobalData – a leading data and analytics company.
Close to 50% of Monarch’s customers were protected by ATOL, allowing them to receive a full refund for the cost of their holiday. However, this meant around half were unprotected, compounded by the fact that travel insurance often falls short of covering airlines going out of business.
Many consumers struggled to claim refunds for associated costs, such as car hire or accommodation which led to questions being asked of travel insurers. The travel insurance industry has perennially suffered from a lack of customer awareness around exact policy terms, and that has reduced overall customer satisfaction.
“The fallout from Ryanair’s and Monarch’s woes will not help the industry improve its reputation, even though insurers may argue that their policies clearly state which events are covered.”
Travel insurance providers could seek to appease consumers by introducing new policies that not only cover airline collapse and flight cancellations, but that also protects related holiday expenses such as accommodation.
Pearce adds: “At the same time, insurers should explore methods to more effectively communicate and engage with consumers. If customers are fully informed about what is covered within their policy, then the travel insurance industry is less likely to suffer reputational damage when things go wrong.”
There’s no doubt that tourists now expect holidays to be relatively cheap, compared to average UK incomes. That includes air travel, which is no longer seen as a luxury mode of transport, but a highly competitive – essentially online – international travel marketplace where the lowest seat price wins. That makes it hard for any insurer to match customer expectations of truly comprehensive, wrap-a-round cover, against a bargain bucket price.
Airlines and holiday operators have a business model which exists on tight margins, and is highly vulnerable to unforseen events; volcanoes, companies collapsing, cruise ships hitting rocks – all these incidents cause massive disruption, and expense, to holidaymakers when things go wrong. But could anyone except the wealthy afford a policy premium which covered every single taxi fare, car hire, extra nights in a hotel, food, medical treatment abroad and repatriation expenses?
If travellers want a kind of molly-coddling concierge service when disaster strikes, then they need to be prepared to pay five star prices for their travel insurance. Such catch-all cover costs a great deal of time, resources and money. That’s the bottom line.
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