Does the UK flight cancellation chaos create a need for parametric insurance?

The insurance industry should “reinvent itself” and incorporate parametric systems after a UK air traffic glitch left travellers stranded at airports, according to Blink Parametric chief executive Sid Mouncey.

A parametric insurance model is where the trigger and claims payout are pre-set, meaning claims processing time is reduced.

Mouncey told Insurance Times that the industry should use the recent chaos at airports as a case study to ”seize an opportunity” and prioritise these types of “proactive” insurance solutions.

Earlier this week (28 August 2023), UK passengers were hit with flight delays and cancellations due to a technical failure that meant controllers were not able to automatically process flight plans.

While the issue has now been resolved, the National Air Traffic Service has warned travellers that disruption could continue for the next few days as flights start to return to normal.

Mouncey said that with such incidents causing a spike in claims, using parametric models would help improve the customer experience.

“We experienced a surge in claims activity, which spiked on Monday, and expect that knock-on delays will continue for the rest of the week,” he added.

“There’s no doubt that the issues currently being encountered will be resolved eventually.

“[There is] equally no doubt that the industry needs to prioritise the deployment of proactive and innovative flight disruption and luggage delay or loss insurance solutions for the traveller.”

Fast claims

Blink Parametric specialises in high frequency, low value claims across the travel sector.

It uses a parametric as a service (PaaS) solution – this means insured travellers who register their flight schedule will get compensation should a delay or cancellation occur on an outward, connecting or return flight.

Compensation includes a payout or an airport lounge pass.

The technical glitch across UK airports forced more than 2,000 flights to be cancelled – for example, Ryanair had to cancel 250 flights on Bank Holiday Monday, impacting around 40,000 passengers.

”We provide real-time assistance when the traveller needs it most, providing immediate compensation and practical service choices, which range from lounge access, to flight rebooking or hotel reservations,” Mouncey said.

”Right now, we are equipped to service thousands of claims per hour to assist travellers that are experiencing the frustration of flight delays and cancellations.

“Our insurance and financial services partners prioritise the delivery of excellent care for their customers. The time has long gone when people had to wait months for compensation. With Blink Parametric – it’s immediate.”