The role of travel insurance during the Covid-19 crisis

The role of travel insurance during the Covid-19 crisis

Now that many insurers have pulled their travel products from the market, the question of what this means for consumers and the industry is regularly being discussed. 

If a customer is unable to travel due to Covid-19, there is currently huge confusion around who they should be approaching to provide a refund. In the first instance should the customer be going 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 then go to the tour operator or agent for a Refund Credit Note or 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 being refunded 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. Currently there are a few companies that fall into this bracket, selling insurance either for business disruption or disruption to the destination, however from what we’ve seen there has been mixed success as to whether claims for disruption due to Covid-19, have been approved. When speaking to your customers about insurance, now or in the future, 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. This does however come at a cost and we may see premiums going up.

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

The COVID-19 crisis is rapidly evolving and the Government's response and the details of support on offer are continuously changing. We'll be updating our posts regularly to ensure our analysis and advice remains as accurate and useful as possible. To receive the very latest information as we release it follow us on LinkedIn.  If you have any questions in the meantime, please get in touch. 
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