Following a spate of terror attacks on European soil this summer, travel insurers in the UK and US are responding to more calls about policy coverage from concerned travellers. How the industry meets the challenge of protecting tourists from the impact of terrorism going forward will be key to how it is perceived by the media and its customers
Bastille Day – a commemoration of the day in 1789 when French Revolutionaries stormed the Bastille prison – is also known as the Fete de la Federation, a celebration of the unity of the French people. On this holiday day on 14 July 2016, however, yet another terror attack took place on French soil – a truck driven into crowds of people, many of them young children, enjoying the celebrations in Nice.
with the escalation of terror attacks in tourist destinations there has been more of a focus on how travellers can be safe while on holiday
With 84 people dead, and many more seriously injured, the attacker was killed by police. The victims ranged from young to old, and hailed from all over the world. French, of course, as well as Russian, American, British, German, Armenian, Ukrainian, Swiss, Italian and Estonian. David Scowsill, president and CEO of the World Travel and Tourism Council (WTTC), said just after the attack: “It is with great sadness that the world hears of another attack in France. We express our heartfelt condolences to the friends and families of the victims of this callous attack. France is the natural home of international tourism, the most visited destination in the world. With this attack on its day of national celebration of the principles of liberty, equality, and brotherhood, the same principles championed by travel and tourism, our sector stands in unity with the people of Nice and France.”
July, sadly, saw yet more terror attacks in Europe – nine in just seven weeks. In Rouen, two terrorists stormed a church in a suburb of the town, killing the local priest and taking four worshippers hostage. Police surrounded the church and shot dead the attackers. Within hours of the attack taking place, the news agency linked with the so-called Islamic State (IS) claimed that two of its soldiers were responsible for the atrocity.
In Ansbach, Germany, a Syrian asylum seeker blew himself up using a bomb in his backpack at a bar, injuring 12 people. The event was the most recent in a series of attacks in Germany – nine people were shot dead by a German-Iranian national at a shopping centre in Munich (an attack that was racially motivated and carried out by a right-wing extremist), and IS claimed responsibility for an axe attack by an Afghan teenager on a train in Wurzburg in which four people were seriously injured.
Germany, France, Spain and the UK are on high alert due to the ongoing threat of a terror attack, but by and large, governments have yet to issue permanent travel warnings advising their citizens to avoid travel to these and other countries where the threat of terrorism is considered to be high. Research by the WTTC has suggested that it takes a country 13 months to recover from the impact of a terror attack in terms of visitor numbers. The study took in 32 countries and covered the period from 2001 to 2014, finding on average that it took just over a year for visitor confidence to return, although some countries recover more quickly than others.
Travellers’ confidence takes a hit
The majority of Americans (86 per cent) are concerned about terrorist attacks occurring while on vacation in various regions of the world in the future, prompting many to make major changes to their travel plans, according to the annual Vacation Confidence Index released by Allianz Global Assistance. The region Americans are most concerned will be the site of an attack is the Middle East (75 per cent), followed by Europe (66 per cent) and Africa (63 per cent).
Following the latest attacks in Istanbul, Israel, Paris, Brussels, and Nice, almost a quarter of Americans (22 per cent) say that the fear of further violence has influenced their vacation planning in some way, whether that be cancelling (six per cent); changing locations (five per cent), travel dates (four per cent), mode of transportation (four per cent), local tours (four per cent) or accommodation (three per cent); or by purchasing travel insurance (three per cent).
Those Americans influenced by an act of terrorism are more likely to be travelling within the US or Canada (50 per cent), likely due to the higher number of domestic – compared with international – vacations planned. Internationally, Americans who have changed their plans were most likely to be visiting Europe (42 per cent), followed by Asia (29 per cent), Latin America (26 per cent), Australia and the South Pacific (26 per cent), the Middle East (22 per cent) or Africa (21 per cent).
An analysis of flight bookings by Allianz showed a 10-per-cent overall increase in travel to Europe during the summer, despite recent acts of terror in Brussels, Istanbul and France. While these targeted destinations saw either a significant decrease or virtually no change in US travellers visiting during the upcoming summer, Europe as a whole recorded an overall increase to 515,676 travellers in 2016 compared to 471,823 in 2015.
“What we’re seeing is that the American traveller is a complex demographic that shares common fears and concerns, but deviates greatly on where they find those fears and how they face them,” said Daniel Durazo, director of communications at Allianz Global Assistance USA. “But we’re pleased to see that whatever those differences are, one thing that remains consistent is that they are finding ways to follow their passion of seeing the world despite the challenges that come with travelling in a time of terror.”
In the UK, a survey by market research firm YouGov and Safe-Journey, a travel insurance supplemental product that covers travellers caught up in terror attacks, found that 42 per cent of British adults are very concerned about terror attacks affecting their holidays. Nevertheless, data from the UK’s Office of National Statistics shows that in the three months to May 2016, UK residents made 16.4 million visits abroad, a four-per-cent increase compared to the three months to May 2015. Expenditure on visits abroad by UK residents in the 12 months to May 2016 increased by 12 per cent. And while people are still travelling, their destinations are changing – Paris, for many years the most popular city to visit around Valentine’s Day, this year lost out to Amsterdam, for instance.
Industry response
It often feels as though the world is becoming a more dangerous place, and with the escalation of terror attacks in tourist destinations there has been more of a focus on how travellers can be safe while on holiday. Travel insurance is an inevitable part of this conversation, but as regular readers of ITIJ know, coverage of incidents such as terrorism varies hugely in policies around the world. Apart from American ‘cancel for any reason’ policies, generally policies are low in cost and therefore cover for events like terror attacks is patchy.
Squaremouth, a US-based travel insurance comparison site, reported recently that it had seen a 234-per-cent increase in searches for travel insurance that covers cancellation or interruptions due to terrorism.
According to InsureMyTrip, a travel insurance comparison site in the US: “Most comprehensive travel insurance plans include, in their coverage for trip cancellation and interruption, some mention of coverage for terrorist acts. With this coverage, [a traveller] would theoretically be able to cancel or interrupt [their] travel plans if an act of terrorism occurred in [their] destination city within a certain number of days of [their] scheduled arrival. This timeframe varies by plan and provider, but in general, can be anywhere from seven to 30 days.”
UK innovation
Ross Penstone-Smith, Association of British Insurers (ABI) policy adviser for general insurance, spoke to ITIJ about how the travel insurance industry in the UK has responded to new challenges in the marketplace: “Travel insurers continually review their products to ensure they meet the requirements of customers going abroad and respond to changing travel trends. Recent terrorist incidents present all those in the travel industry with new challenges and travel insurers have an important part to play in this; ensuring travellers understand the cover available on the market, and what their existing travel insurance policy would cover them for if a terrorist incident affected their travel.”
He added: “We have already seen at least one new terrorism specific travel insurance product arrive on the market this year. I am sure that all insurers will continue to assess how they can best respond to the risks travellers face when overseas to support their customers and meet the demands of the market.”
ITIJ also spoke to Kate Huet, managing director of UK broker International Travel and Healthcare Ltd, which developed the Safe-Journey add-on referenced by Penstone-Smith above. She said that the Safe-Journey/YouGov survey also found that 69 per cent of UK adults would want to cancel their trip following a terror attack in their intended destination if they knew they could get their money back. While other travel insurance products may cover cancellation fees should a government deem a destination unsafe to visit, and others will cover medical expenses and repatriation, Huet pointed out that what has not been available so far in the UK market is a policy that will cover a client’s disinclination to travel.
We have already seen at least one new terrorism specific travel insurance product arrive on the market this year
This, said Huet, is Safe-Journey’s USP. “There has been a lot of interest in the product from major players in the UK market,” she told ITIJ, “either as a supplement to normal policies or as an integral part of their cover, becoming part of the catastrophe clause.” And it’s not just UK-based companies showing an interest in the product, conversations are also ongoing with travel and insurance providers in Europe too.
Developing such a new product was a complicated process, and the fact that it has reached the market is something that the sector should be proud of. After all, responding to customers’ needs is something that insurers – particularly travel insurers – are continually focused on; and when it comes to cover for terror-related activities, rarely is the industry’s focus sharper, as it seeks to protect those in need or fearing the worst. ⬛
