'Travel insurers need to come back with better policies'
Former MemberThe travel insurance sector has been rocked by the pandemic and the reduction in insurance capacity, but all the signs now suggest things are going to improve as quickly as they collapsed when Covid hit – halting the nation’s travel plans.
This rapid turnaround is good news for the industry. It will undoubtedly lead to new opportunities for growth among travel specialists who are ready to grab them, and drive a new phase of growth in the market. We’re certainly targeting strong growth by the end of next year, and we won’t be alone in aiming to build on our pre-Covid share of the travel insurance market.
European family holidays and short trips are the first to show signs of recovery this year, and I’d expect long-haul to return to pre-pandemic levels as people’s confidence to book those types of holidays increases. Strong relationships with our specialist travel insurance distribution partners have been crucial, and it’s been important to continue supporting them as best we could during the period when travel was in the doldrums.
The pandemic has taught insurers some valuable lessons. Improvements to policies include the ability for policies to be extended where customers are unable to return home on their planned travel date due to pandemic-related travel disruption or border closures. And we’ve done a lot of work to try to develop our products so they deliver coverage appropriate for the post pandemic market.
We need to continue improving policies, as well as the information being given to consumers at point of sale, to provide clarity about the various risks we are insuring them for. Travel insurance is a complex product with a lot of different covers, although cancellation and medical expenses covers remain key in the Covid era.
But customers are going to have to expect to pay more for travel insurance. Prices are hardening because Covid, and the resulting high demand for care beds, has created operational problems in some hospitals. This, in turn, has increased the costs of overseas medical care. Medical assistance partners are also finding it more difficult to arrange for medical escorts or air ambulances to fly people home due to ongoing testing requirements and entry restrictions, which vary widely across different countries.
There will no doubt continue to be fallout from the pandemic and, of course, we now have to consider the potential impact of the situation in Ukraine on broader travel prospects – but as long as the travel insurance industry continues to respond quickly and look after its customers, the future for this sector looks bright.
Dan Baldwin is head of personal lines at MGA Avid Insurance, specialising in travel insurance.
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