The role of travel insurance during the Covid-19 crisis

The role of travel insurance during the Covid-19 crisis

Many insurers have now pulled their travel products from the market. What does this mean for consumers and the industry?

If a customer is unable to travel due to Covid-19, there is huge confusion around who they should approach for a refund. Should the customer go to the tour operator, insurance company, or credit card provider? Currently, there is no clear answer here, however one consideration is that the customer should try and claim through their insurance provider first, and if this is rejected they can go to the tour operator or agent for a Refund Credit Note or a cash refund. This would help to alleviate the issue of customers successfully claiming on their insurance and then going to the tour operator who also pays out, therefore receiving a refund twice. 

What will the travel insurance landscape look like in the future?

If insurers don’t provide cover under the existing policies, the government may have to get involved to confirm what underwriters should or shouldn’t be covering. Currently, the risk to the underwriters is unclear as this is an unprecedented situation and in the future, it may be that new policies are written to cover pandemics, but this will likely affect the price. Having said this, we expect that there will be a surge in customers wanting to insure their trips post Covid-19 and would be happy paying a premium price to give themselves that extra reassurance. There is an opportunity here for tour operators and travel agents who have their own insurance products. At the moment, there are a few travel companies that sell insurance either for business disruption or disruption to the destination. However, we have seen mixed success for claims for disruption due to Covid-19, being approved. When speaking to your customers about insurance, ensure they fully understand what is covered by the policy and what restrictions may be in place. 

Going forward, the overarching theme is that any travel insurance policies that are available need to be very clear about what is covered, to make the claims process easier. However, this does come at a cost, and we may see premiums going up.

Chargebacks

Visa and Mastercard have both provided guidance on chargebacks, which is an ongoing issue. Visa has gone further than Mastercard, to say that if a travel company cancels a customer’s booking due to Covid-19 then a chargeback can’t be made. However, from what we’re seeing, this isn’t feeding through to merchant acquirers and they are still processing chargebacks. If you are receiving chargebacks, especially through Visa, you should be challenging them. 

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