Payouts for medical claims and cancellations in travel insurance to reach record-breaking levels as more insurers offer COVID-19 cover, says GlobalData
An increasing number of insurers, including big names such as Blue Insurance, Allianz, Caster, and Staysure, are reincorporating COVID-19-related repatriation and medical expenses as well as cancellation coverage, despite the associated risk of these claims in the travel insurance market. However, this could be a good move in the long term, says GlobalData, a leading data and analytics company.
Jazmin Chong, Insurance Analyst at GlobalData, comments: “GlobalData's 2019 UK Insurance Consumer Survey found that the most common reason for claiming on travel insurance last year was medical claims, with 31% of respondents citing this reason, while cancellations were the second highest at 29%. These make up a large part of the cost of claims for the travel insurance market, having generally increased over recent years and reached a record high in 2018, costing insurers £399m, although it decreased slightly to £377m in 2019. The ABI estimates that travel insurers have paid at least £275m in COVID-19-related claims for the first quarter of 2020.
The revamp of products comes after a temporary pause on sales of new travel insurance policies implemented by insurers between April and July 2020.
Chong notes: “If more insurers begin to include COVID-19-related medical and cancellation claims as part of their standalone insurance products, the travel insurance claims market could hit record levels. However, despite the potential risks associated with higher claims, the integration of these offerings during unprecedented times is a good move by travel insurers to gain customers’ trust and increase their market shares in the longer term.”