Simon Hoskin, director of travel at Gallagher Bassett, explains what the surge in travel cancellation claims means for holidaymakers and insurers
The post-pandemic surge in travel has led to an almost equally significant increase in travel cancellation claims, driving up premiums and impacting insurers and consumers.
Previously, before the Covid-19 pandemic, cancellation claims accounted for approximately 30% of all travel insurance claims. However, recent data indicates that this percentage has risen to 40% or more.
The average settlement amounts for cancellation claims have also seen a significant increase.
Claims settlements for travel within the European Union (EU) have risen by 37%, while settlements for long-haul destinations – excluding the United States – have increased by 22%.
These statistics underscore the financial impact of cancellation claims on insurance providers and the challenges they face in managing and covering these rising costs.
Reasons for claims
One of the primary reasons for the rise in travel cancellation claims is the declining health of travellers.
An ageing population and a growing number of people experiencing chronic health conditions contributes to the likelihood of unexpected health issues preventing or disrupting travel.
This has placed immense pressure on insurance providers, which now face a higher volume of claims related to complex medical cancellations.
Unforeseen events – such as natural disasters, civil unrest and delayed or cancelled flights – have also contributed to the surge in cancellation claims, with consumers seeking to cancel or postpone trips due to safety or logistical challenges.
Industry impact
These factors have strained the underwriting performance of insurance providers, with the increasing cost and complexity of travel cancellation claims creating a significant financial burden.
To address these challenges, insurance providers are raising premiums to maintain profitability and ensure the sustainability of their operations.
As the travel industry continues to recover from the Covid-19 pandemic and keep up with the increasing demand for travel, it is crucial for travellers to carefully consider their travel insurance options and understand the potential risks and costs associated with cancellations.
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