As Coronavirus spread, many people realised that their standard travel insurance did not cover them and millions were left stranded overseas. It’s a tough year ahead for the insurance industry, as more cancellations will mean more complaints – then there’s the wholesale shrinkage of the tourism sector; airlines going bust, hotels closing, tour operators going into administration. Ouch.
Now some new research by comparison website, Compare by Review (CBR) has uncovered holiday makers thoughts and habits when it comes to buying travel insurance. In the future customer reviews may well make all the difference when it comes to reviving the travel insurance market in 2021.
Whether it’s lack of time, lack of knowledge or the optimistic ‘it won’t happen to me’ thought process, less than 50% of those surveyed had ever bought a bespoke travel insurance policy. More shockingly is that out of the 71.7 million visits overseas last year, over 10 million of those trips were taken uninsured, putting those individuals at serious medical and financial risk.
Dr Miriam Goldby, an expert in insurance law at Queen Mary University of London commented;
“There are legitimate reasons why businesses interruption claims, and even holiday insurance claims, are not being paid. This is to do with the wording of policies and clarity on the causes of interruptions. Going forward, insurers must redouble their efforts to describe their insurance products clearly and explain options for add-on pandemic cover to offer insurance products that are best suited to their customers’ needs.”
In light of the recent Covid-19 pandemic many of those surveyed admitted that previously they had rushed their decision and purchased a policy lacking in benefits and service or realised, too late, that they weren’t covered for cancellation. One participant admitted that they thought ‘insurers wouldn’t pay out anyway’, and that they would call it a ‘Force Majeure’.
Another told us ‘I doubt you could claim easily, with another adding that they had seen several reports of insurers using a ‘get out clause’ when paying out a claim and said it was ‘fairly off putting’ when deciding whether to buy travel insurance. It seems that a lack of understanding and badly purchased policies are to blame for this low level of trust and appreciation of travel insurance. These comments are fairly common which is why the team at CBR are trying to change the industry for the better and make the decision process a far easier and more reliable one.
CBR ranks providers exclusively on the quality of their service rather than just price alone. Most often you find that many policies that fall flat are often cheaper and do not hold a lot of cover.
Richard Brenkley CMO of CBR explained: “We strive to educate our users on the merits of not just basing their insurance decisions on price alone, but to look into the level of service and cover you should expect from your policy. Many of those holidaymakers who chose to save money on their policy or who didn’t pay attention to the details, are now facing being out of pocket due to their policy not standing up when they need it most”
Luckily, there are many who have changed their view on holiday insurance since the pandemic and now realise its importance. Interestingly, one commented and said that they have always had travel insurance due to their partners pre-existing medical condition but now they appreciate the ‘importance on a non-medical side’ as cancellation costs can often spiral as high as medical costs especially if you have purchased an expensive trip.
Many also agreed that they will now purchase their policy as soon as any future trips are booked adding ‘I would have never even thought about it before this but I would definitely purchase travel insurance if we were to book a holiday in the future’ another added ‘I would make sure any insurance I bought would cover every situation known to man’ which leads us to believe that people’s attitudes and shopping habits will change in the future and more care and attention will be applied.
Insurance Edge reported back in March 2020 that travel insurers were hurriedly changing their policies to exclude pandemics and all the associated repatriation costs that future outbreaks might entail. Most travel industry analysts now predict higher prices, fewer holidays and flights available from now on. That in turn means insurance is bound to increase in cost, assuming people want a 4K holiday insured for every eventuality.
With the travel industry turned on it is head and the insurance industry following suit, many holiday makers are now wondering what the future holds for their annual getaways. Many participants told us that they will be holidaying at home from now on and ‘explore their own country’ with a few even mentioning that they will investigate purchasing holiday insurance to cover these trips.
Our investigation also highlighted that many holiday makers were not aware of the benefits of buying your travel insurance at the time of booking your holiday. Shockingly nearly 38% of those surveyed did not realise that they were insured from the moment they purchased their policy and presumed it started from the first day of their holiday. One participant added that it ‘makes more sense to take out cover when booking to give you a better level of cover’. This lack of understanding results in a large proportion of holiday makers not getting the true benefit of their policy, especially the tardy 6% surveyed who did not usually purchase their insurance until they had reached their destination.
Subsequently, if you now try to buy an annual travel policy you will find that many are now not covering any cancellations due to the Covid-19 outbreak or any government bans on travel due to a pandemic. Those with annual policies in place pre the outbreak are benefiting from a far more comprehensive policy. But what will the future hold? Will new UK based insurance policies be appearing on the market once restrictions are lifted? Quite possibly.