Coronavirus fears trigger travel insurance sales boom

Fears that holiday destinations could be designated ’no-go’ zones due to the spread of novel Coronavirus are thought to be behind a surge in demand for travel policies, Insurance Times has heard.

Aggregator GoCompare said it had seen a 277% jump in policy sales in the last week alone, searches up 92% and a 159% year-on-year rise due to Coronavirus, also known as Covid-19.

“With the Coronavirus spread showing no sign of easing ahead of the Easter break and with many holidaymakers set to travel abroad, we are seeing a shift away from customers buying ‘same day or within a week of travel’ to ‘one month to travel’.

”This would suggest that customers are buying earlier for their Easter holidays, and other later dates”, the company said. 

Specialist travel insurer tifgroup has also reported a steep rise. 

“We have seen a surge in the amount of Coronavirus-related inquiries made to our customer service team in the last month”, head of product Steve Howard told Insurance Times.

The main concerns for customers are around changes to the FCO’s (Foreign and Commonwealth Office’s) advice, whether they can still travel abroad and what holidaymakers should do if they are unable to return home from their trip.

“There has also been a significant increase in policies bought through price comparison sites and an apparent change in consumer buying habits.”

Advanced purchases

”In particular, customers appear to be purchasing their travel insurance much further in advance than they usually would.

“On average, consumers on comparison sites tend to buy their travel insurance around two weeks before they are due to go on holiday.

”However, we have noticed that holidaymakers are purchasing cover for trips as much as 3-6 months in advance in preparation for their summer holiday.

“We always recommend that travellers take out a travel insurance policy as soon as their trip is booked to protect both themselves and their holiday from any unforeseen circumstances.

“People who have booked a package holiday will have protection under the Package Travel Regulations (PTR) which puts the onus on the tour operator to offer alternative destinations or to refund the cost of the holiday, should the FCO advice change.

“Those who have made their own arrangements should check their travel insurance policy to see if they are covered for cancellation or curtailment, following and an FCO directive against ‘all’ or ‘all but essential’ travel to a holiday destination.”

Underinsurance

The surge in policies being taken out also raises the prospect of customers being underinsured. Aviva, which told Insurance Times it had also seen a spike in interest for its travel insurance products, said it had adjusted its pricing due to ”the increased risks presented by this situation”. 

Separately, Aviva UK chief executive Colm Holmes told Insurance Times yesterday that it was something the company ”was keeping a very close eye on”.

He added that 94% of its travel business is actually sold through Aviva’s banking partner, but it does sell through UK Digital as well.

”We constantly review the market in terms of ensuring we get the balance right between our existing customers who we want to make sure we support and are loyal to, and closing new business.

”So, that’s something we’ll continue to keep an eye on and we are beginning to see in the market some actions being taken by insurers on single trip covers to certain locations and it’s no different for Aviva.

”We will continue to closely monitor that and if we feel it’s necessary to take action because of what could essentially become uninsurable risks, we will take that action to protect our existing loyal customers but also to protect Aviva,” Holmes added. 

Difficult circumstances

Tim Harris, chief operational officer at Direct Line told Insurance Times that as a significant business it is used to dealing with difficult circumstances.

Harris said that it has seen around £1m worth of claims mainly relating to cancelled holidays for areas that the FCO said that people should not travel to.

Direct Line has about 3.6m enforced travel insurance policies mostly sold through bank account package deals via NatWest and Nationwide.

“We are well prepared, we have good reinsurance protection in place in relation to the travel insurance business we write.

”We are also monitoring the impact on us operationally and we are monitoring the guidance that the government is putting out, and we are thinking about the potential impact on our asset portfolio.

”All of those we feel are under control and well within our risk appetite but we are not at all complacent about this.

”We are making sure that we are monitoring the situation as it develops.”

Howard said the key message for travellers is to make sure you have travel insurance in place as soon as you’ve booked.

”If you’ve booked and haven’t got insurance, get it sorted as soon as possible.”

“If you have insurance in place and the FCO advises against travel to your destination, you should be covered, whereas if they have listed your destination area as no travel before you buy your policy, an insurer won’t pay out.”

He added that travellers already in restricted zones  and trying to leave will continue to be covered by travel insurance, whereas anyone actively trying to travel to these areas or any other area which has a travel restriction imposed by the FCO would now risk invalidating their travel policy.

“If you’ve booked a trip and now want to cancel it, then you may find your insurer won’t refund you if there’s no warning on travel to your destination.

”If you’ve booked flights and accommodation separately, it’s worth contacting the airline you’re flying with to seek their advice on disruption to future flights, Howard added. 

”We’d also urge people to get in touch with their insurer to check cover and restrictions, or for more specific advice relating to their policy.”