The fire at a sub-station near Heathrow airport highlights two things; One, no Net Zero policy should prevent a major airport from having its own diesel generators to power essential air traffic, lighting and computer systems. Two, the parametric travel insurance model is being tested this week like never before.
Here’s some comment from DBRS Morningstar on the situation;
This commentary discusses the potential implications for the global travel insurance market of the temporary closure of London’s Heathrow Airport following a fire in nearby electrical substation.
Key highlights include:
— The temporary closure of Heathrow Airport will have a ripple effect in commercial air travel for days given its global hub status.
— We estimate that travel insurance claims will cost the industry tens of millions of dollars but will remain manageable.
— Trip cancellation, trip interruption, and trip delay will be the coverages mostly affected by this incident.
— Travel insurers will face a sharp spike in claims handling for week, creating operational strain.
“The Heathrow Airport incident will likely trigger a sharp and sudden increase in travel insurance claims related to trip delays, cancellations, and disrupted connections. For insurers, the financial exposure could be considerable”, said Marcos Alvarez, Managing Director, Global Financial Institution Ratings. “The relatively low contribution of the travel insurance business to overall revenues will help mitigate the impact on insurance groups’ credit profiles. However, this incident could cause a temporary increase in the cost of travel insurance and/or the restriction of certain coverages, particularly for travel involving critical air hubs.”
INSURANCE ADVICE – CAN YOU CLAIM?
All Clear has updated its website with advice to policyholders here. For those stuck abroad your existing policy will be extended by 7 days automatically, which suggests the backlog could be lengthy.
Insure & Go have similar advice on their site – don’t go to Heathrow, re-booking flights will be free, those abroad will have cover extended by 7 days.
Current advice from Heathrow airport is that the site is closed to passengers until midnight tonight.
INDUSTRY COMMENT
Peter Smith, senior vice president of travel and mobility at Cover Genius, comments:
“We at Cover Genius extend our sincerest thoughts to all those affected by the unforeseen closure of Heathrow Airport today due to the local fire. Our primary concern is for the safety and well-being of those impacted by this incident, including travellers, staff, and emergency responders working diligently to manage the situation.
In times like these, the unpredictability of travel disruptions highlights the vital importance of having comprehensive travel insurance. At Cover Genius, in partnership with the world’s leading airlines and travel companies, we strive to protect travellers from the financial and logistical challenges that such unexpected events can bring. Today’s incident underscores why travel insurance is not just a luxury, but a necessity.
Furthermore, we want to emphasise the role of innovative insurance solutions like parametric insurance, in mitigating the impact of disruptions like these. Unlike traditional insurance products that can require lengthy claims processes, parametric insurance is designed to offer immediate support. With pre-defined triggers, such as flight cancellations or in today’s case airport closures, parametric insurance enables auto pay-outs to affected travellers, providing them with quick and hassle-free financial assistance.
As the travel landscape continues to evolve, so too should the solutions we provide. Cover Genius remains committed to leading the way in delivering seamless and efficient insurance experiences that meet the dynamic needs of travellers worldwide. We believe that by leveraging cutting-edge technologies and innovative insurance models, we can better equip travellers to navigate unexpected disruptions and ensure their journeys are as smooth and stress-free as possible.”
ELEVIATE AVIATION
Elevate Aviation Group offered these thoughts;
“The economic impact of the Heathrow shutdown represents hundreds of millions to the airline industry. The loss of 1,200 flights a day at the world’s fourth busiest airport is a real throat punch to airline operators and businesses who are dependent on the worldwide aviation infrastructure at the worst possible time,” comments Elevate Aviation Group CEO Greg Raiff. “These airlines face enormous fixed costs – the loss of revenue will impact the global economy in ways that we haven’t seen since the pandemic.”
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