Adiel Mambara:Aviation expert
WITH the declaration of a pandemic, caused by the spread of the Covid-19 disease, the world is experiencing the biggest lockdown in recent times.
A pandemic is classified in the literature as one of the five major categories of disasters, next to political events, natural disasters, financial events, and manmade events, and the travel and tourism sector have suffered the hardest thus far from the series of epidemics like avian flu, swine flu, pandemics and now Covid-19. The global health pandemic is raising awareness about the need for travellers to take out travel insurance before they travel.
The World Travel and Tourism Council (WTTC) released new normal guidelines for travel insurance aimed at rebuilding consumer confidence. In a statement, WTTC emphasised that insurance is a vital part of the travel and tourism experience as it provides peace of mind and risk mitigation to consumers, suppliers, and organisations across the sector.
Research has shown that travel insurance is taken by a large proportion of international travelers, but that a third of all travel claims made are not fully accepted by the insurance providers. In Australia for example, the Australian Financial Complaints Authority received more than 4 700 complaints related to Covid-19 since the World Health Organisation declared it a pandemic in March 2020, and more than 1 500 are connected to travel insurance and likely to include policyholders who have been denied premium refunds.
When Covid-19 hit, travel insurance did not help many travelers recover the cost of their cancelled trips. What, then, were they paying for? Through the travel insurance broker InsureMyTrip.com, Suzanne Tow of New York City paid US$270 to cover a US$5 000 trip in May 2020 to Yosemite National Park. When the tour was cancelled, Tow filed a claim with her insurer and discovered, like so many other travellers, that travel insurance does not cover cancellations because of a pandemic.
This combination of findings provides some support for the conceptual premise that Covid-19 is impacting the insurance industry in multiple ways — from employees and business continuity issues to client service considerations to the financial outlook. Insurers are responding to the widening Covid-19 outbreak on multiple fronts — as claims payers, employers, and capital managers. Each has its own distinct challenges, not just for the insurance industry, but for the economy and society at large.
Some insurers stopped covering Covid-19 once it was declared a ‘known or foreseen event,’ a few did not. A ‘known’ or ‘forseen’ event means there are limited, if any, benefits available relating to the outbreak. These findings provide important insights into the role of each insurers risk management team post Covid.
They should assess how quickly and effectively they were able to respond. They should also determine any additional steps that may need to be taken to adapt their organisations and make them more resilient if faced with future pandemic events that help restore consumer confidence.
In the United Kingdom (UK) there are a few providers that are offering wider Covid-19 cover, including costs of medical treatment, cancellations, and repatriation.
Just 2% of insurers offer wider Covid-19 cover including the cost of cancellations, medical treatment and repatriation, according to Brian Brown of Defaqto, a ratings service. They include CoverForYou, Cedar Tree, Insurefor.com and Outbacker.
Insurers like Allianz Global Assistance USA, have since made several temporary changes to their policies, to provide coverage for trip cancellations, trip interruptions and emergency medical care for policyholders who become ill with Covid-19, in addition to extending refunds of travel insurance premium to customers whose travel suppliers have cancelled their trips due to the pandemic.
Under Chubb’s travel insurance policies, Covid-19 is considered a “sickness,” making it potentially eligible for coverage in accordance with policy provision, James Walloga, executive vice president of Chubb Accident and Health, said.
“One example is if an insured contracts the virus and can’t travel. Then their nonrefundable travel costs could be eligible for trip cancellation and/or trip interruption benefits,” he said.
Some providers are already now developing policies that will offer more coverage for future pandemics, such as travel warnings and Center for Disease Control Prevention (CDC) alerts.
For consumers to feel confident to travel, they will have to know they are covered in the event they contract any illness, especially a respiratory one linked to the Covid virus. One well known fact for sure is that consumers will want choices that are predicated on their own personal needs.
Consumers are still understandably wary about flying again, despite the assurances about the safety of flying from airlines. Airlines such as Emirates have taken the lead, by enticing customers back to the skies by providing free global cover for Covid-19 health expenses of up to US$175 000 (€150,000) and quarantine costs of US$115 (€100) per day for 14 days, should consumers be diagnosed with Covid-19 during their travel.
Similarly, Virgin Atlantic is the second global airline to offer Covid insurance that will cover emergency medical expenses (totaling up to £500 000 or US$657 450 per customer) for anyone travelling with Virgin Atlantic who becomes ill with Covid-19.
Additionally the policy covers expenses of up to £3 000 (US$3 944) for denied boarding or for consumers who have to quarantine due to testing positive or are suspected to have Covid-19 during their trip. I suspect more airlines will start offering Covid-19 insurance.
When consumers are ready to travel, they are going to demand more, want more and yes — they are going to get more! With any travel purchase, travel insurance will be of paramount importance and scrutiny of these policies will increase from both consumers and regulatory bodies.
Zimbabwe-born Mambara has demonstrated history of working in the airlines/aviation industry is currently the Country Manager (UK and Ireland) for Royal Brunei Airlines. In addition, Mr. Mambara is a Board Member for the Board of Airlines Representatives UK (BARUK).