Insurers react to ‘Trump’ travel ban claims

Insurers said they have received claims for disruption caused by President Donald Trump’s travel ban, but they played down volumes and the impact on claims handling.

The executive order banning foreign nationals from entering the US, signed on Friday, covered over 215m people from seven countries including Somalia, Syria and Iraq, but also impacted UK nationals who are dual nationals or were born in one of the targeted countries – the most prominent being decorated Olympian, Sir Mo Farah, who was born in Somalia.

The confusion deepened as the Foreign Office and the US Embassy issued conflicting messages about exactly who was affected. Insurers including Axa, Direct Line and Aviva subsequently moved to enhance cover for customers who had taken out a policy on or before 30 January, including those who had suffered travel disruption as a result of the ban, even if they were not directly impacted by Trump’s policy.

A spokesman for Axa said: “The law changed overnight. So we adjusted our policy.”

“We’ve had claims…The insurance will pay out if the customer has had a financial loss. That is, for costs you can’t claim anywhere else – specifically, from an airline or tour.”

Axa has 5m travel insurance policies in the UK, including its direct and intermediated book. The spokesman added that the vast majority of these policies were included in the amendment. 

In a statement Zurich said they would give ’special consideration’ to claims arising from the ban, but emphasized the scenario was not strictly covered.

Neither Aviva nor Axa would rule out extending the policy beyond its initial enhancement for annual policyholders, with the immigration ban expiring after 90 days. They dismissed suggestions that the changes presented airlines with a blank cheque for passing on unforeseen costs.   

Very few available travel insurance policies offer cover for such an extreme eventuality, known as a force majeure, most famously seen in the UK during the Icelandic Ash Cloud fallout in 2010 which resulted in over 10m passengers being stranded and airline losses of $1.7bn. On that occasion, Insurers were criticised for not offering to pay claims.

The latest move highlighted concerns regarding customer confusion on the limits of cover, in particular with standard travel policies, which dominate the market. In a related development Aviva, Axa and Travel Insurance Facilities Group said they are working on marketing campaigns to help make the exclusions of their policies clearer to consumers, with Axa also set to cut their policy wording length by up to two thirds.