Covid 19 effects on Travel insurance

Covid 19 effects on Travel insurance

Travels grounded to a near-halt in record time as state and federal governments ordered non-essential businesses to shut down, international borders got closed, and shelter-in-place measures were adopted, usually with little advance notice.

 A new poll by the American Hotel & Lodging Association (AHLA)  implied that people are most likely to travel for vacation this year. This is a significant increase from the past year when only 21% of survey takers stated that they would be travelling for vacation or leisure since the onset of the COVID-19 pandemic.

The situation on travel is similar to the 2002-2004 SARS outbreak. This pandemic shed light on the role of pandemics in the travel insurance industry. After that event, most carriers updated their travel policies with some exclusions and limitations specifically related to pandemics and epidemics. This led to confusion among policyholders, as those who purchased travel insurance recently automatically assumed their cancelled or interrupted trips would be covered.

For many carriers, the January 2020 pandemic fell into the category of a “foreseen event” thereby disqualifying it from coverage applying to trip cancellation or trip interruption. However, an exception to this; is if the policy includes Cancel for Any Reason or Interruption for Any Reason. As the benefit name implies, the cancellation or interruption is covered under any circumstance. Therefore, policyholders who have purchased the “any reason” benefit policy are covered and could recoup at least a portion of their trip.

However, if a policy[1] [2] holder cancels or interrupts his or her travel as a result of fear of the pandemic (not because of an illness as a result of the pandemic), this reason may not be covered. Given diverse marketing needs and unique distribution channels, there is no specific uniform policy to advise or regulate carriers as to when or why these benefits may not be covered.

Policyholders are receiving multiple answers from multiple sources, further adding to their confusion.

Currently, some carriers have responded to the pandemic by offering refunds outside the normal free look period or a change of coverage effective date if policyholders postpone or reschedule their trip due to coronavirus. The hope is to keep the business on the books, not cancel outright.

Currently, some carriers have responded to the pandemic by offering refunds outside the normal free look period or a change of coverage effective date if policyholders postpone or reschedule their trip due to coronavirus. The hope is to keep the business on the books, not cancel outright.

Insurance companies may also experience some difficulty obtaining reinsurance for travel, especially for catastrophic events and unforeseen pandemics. Reinsurance companies are also trying to mitigate their risk. Given the current circumstances, reinsurers might be warned, especially due to recent medical models, the rise of new variants of COVID, or travel restrictions remaining in place in some Red states.

Going forward, more new regulatory compliance hurdles are anticipated as a result of COVID-19, but to what extent is not yet clear not just because many Departments of Insurance are operating with a reduced capacity, but because there will likely be added scrutiny on travel policies.

Testing before travel

Asides from thinking about travel insurance, as individuals we need to consider our health and wellbeing. Consider maintaining social distance, wearing a nose mask and regular hand wash and sanitizing.

Ensure you test for Coronavirus monthly. You can book a Coronavirus test here.

Arriving in the UK from a trip? Ensure you take our UK Arrival COVID-19 Test.

Your well-being is always our priority.

Test result provided by PHE/CQC approved UKAS accredited, ISO 15189 2012 Laboratory.
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