Maisie Blewitt is Head of Commercial at Transfer Travel, a leading marketplace for travel resale. After successfully transforming how consumers recover costs from cancelled trips, she’s now leading the company’s expansion into the insurance sector, where her team is building solutions to help insurers reduce their exposure to cancellation claims.
Picture a family’s dream holiday to Disneyland – cancelled because of an unexpected surgery. The parents get their money back through their travel insurance, their kids get promises of future trips, and Disney simply resells the hotel room. Everyone walks away happy – except the insurer, who just wrote off thousands with no chance of recovery.
This isn’t a one-off scenario. It’s playing out thousands of times across the industry, with insurers haemorrhaging money on each cancellation while tour operators double-dip by reselling the same bookings. Unlike auto insurers who can salvage written-off vehicles, or home insurers who might recover stolen goods, travel insurers face a total loss on every cancellation claim. But could this long-accepted industry norm be due for disruption?
The hidden cost of current claims processing Recent data paints a concerning picture for insurers. Travel insurance claims have seen a 19% year-on-year increase, with cancellations accounting for 35% of all claims. For insurers, this translates to significant financial exposure – in 2023 alone, UK insurers paid out £511 million in travel-related claims. These numbers continue to climb, putting increasing pressure on insurers’ bottom lines.
Every day, thousands of pre-paid hotel rooms sit empty, and countless flight seats go unused – representing billions in potential recoverable value across the travel industry. These lost bookings reveal a clear gap in the market – one that’s ripe for innovation.
The big question is: does it have to be this way?
Rethinking the traditional
Innovation in this space isn’t just theoretical – it’s already emerging through practical solutions that leverage existing legal frameworks. The EU Travel Directive 2015 permits the transfer of package holidays under certain conditions, opening new possibilities for insurers. Instead of the traditional approach requiring cancellation certificates, insurers can accept power of attorney over the travel plans from policyholders who need to cancel their trips.
As major insurers begin exploring this opportunity, we’re approaching an industry watershed moment. Those who move first to partner with secondary travel marketplaces will gain early advantages in cost recovery but also in customer satisfaction, potentially triggering wider adoption across the sector.
This shift in approach will fundamentally change how insurers handle travel claims. By taking ownership of cancelled bookings rather than simply writing them off, insurers can recover a significant portion of their losses through secondary marketplaces. Early trials of this model suggest that up to 70% of the original booking value could be recovered in some cases – a dramatic improvement over the current total-loss scenario.
Building customer trust
Beyond the direct financial implications, this new approach will transform how customers view and interact with travel insurance. When claims are processed through secondary marketplaces, the entire experience becomes more streamlined and transparent. Early adopters report significantly faster claim resolutions, with some settlements completed in days rather than weeks. This efficiency addresses a critical industry challenge: customer scepticism. With 21% of British travellers currently opting out of travel insurance, citing lack of perceived value as their primary reason, a more responsive claims process could help rebuild trust. The potential for more competitive premiums, made possible through cost recovery, further strengthens the value proposition for hesitant travellers.
A sustainable future for travel insurance
The travel insurance sector can’t keep absorbing these losses forever. With claims volumes climbing and consumer expectations shifting, the old model of simply writing off cancellations is becoming increasingly outdated. Forward-thinking insurers now have a chance to turn this story around – transforming what’s always been a guaranteed loss into a recovery.
The framework exists, and the technology is ready – it’s time for the industry to make its move.
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