Bridge the gap

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First published in ITIJ 85, February 2008

gapyearLizzie Cernik looks at the insurance needs of the ever-growing number students seeking exotic gap-year experiences

The gap year phenomenon has exploded over the last few years, with record numbers of students jetting off on some form of round-the-world adventure. In the UK alone, over 80,000 students take some form of gap excursion each year, according to Andrew Jones, head of Geography at Birkbeck College, London, who has carried out extensive research into the gap-year trend. But is this important travelling sector adequately covered? Do these adventurers pay enough attention to the cover they are buying? And do insurers offer an adequate range of policies to suit their ever-growing needs?

Cutting it short

Gap-year travel insurance generally provides the basic pillars of cover, including cancellation and curtailment, theft of personal items, medical expenses, repatriation and participation in dangerous sports; but policies of course vary, as does price. What cover is essential, then, and what should insurers expect in the way of potential claims?

Regarding the need for curtailment cover, Richard Oliver, chief executive of the Year Out Group, says: “From what I have learned from discussing this issue with our members, I estimate that the percentage of travellers who cut their placements short varied between zero and three per cent [in 2006].” In that year, organisations who were members of the group arranged just under 30,000 placements lasting from two weeks to over a year, the average trip lasting 14 weeks. He adds that most young people who book trips with Year Out Group are educated to degree level and complete extensive research before embarking on their trip, making them typical of today’s more discerning gap-year traveller. As a result, the most common reasons for curtailing a trip include injury or illness, a serious problem at home such as the death of a close family member, and home-sickness. Occasionally, if on a specific gap-year travel programme, the student may break ground rules or is not compatible with the programme and will thus need to return home, but this is unusual. Concordia International Volunteers organises overseas volunteer trips of various durations. Francesco Bonini, the company’s international programme co-ordinator, confirms: “We send between 200 and 300 UK volunteers overseas each year and it happens very rarely that someone has to leave early. If they do, it’s usually for personal or family reasons.”

Repatriation is subsequently an extremely popular policy inclusion, and more and more gap-year travellers are making sure they have this cover. Grant Whiskin, deputy managing director of Towergate Chase Parkinson, an independent travel underwriting and administration company affiliated to STA Travel, says: “The most common claims include cancellation, medical expenses and baggage claims. Cancellation usually occurs if the student or a member of their family falls ill prior to travel. In the case of accident or medical emergency whilst travelling, policies will cover the cost of treatment locally and also, dependant upon the nature of the event, repatriation to the country of residence. In addition, should a close relative or family member suffer accident or illness, cover will usually be afforded to repatriate the policyholder to their country of residence.” Most UK insurers, including Ace and Boots Insurance, now offer a substantial sum for repatriation.

False start

It should be noted to customers, however, that any pre-existing medical condition, not just of the traveller himself but also of a close family member, needs to be declared upon purchase of the policy, or before travel. As Whiskin points out: “Nearly all travel insurance policies – and gap-year is no different – exclude cover for pre-existing medical conditions, though some allow customers to be specifically underwritten by calling a medical screening service. Often though, any cover granted is subject to the payment of an additional premium. For those seeking such cover they should inform insurers of their own conditions as well as those of close family members, as the insurance can cover repatriation should a relative fall ill. It is at the insurance company’s discretion as to whether they elect to insure the student for the additional risks associated with known medical conditions.”

In a similar vein, a nice touch included in some policies is cover for parents flying out to be with an injured traveller. Endsleigh Insurance, for example, which provides cover for a number of situations relevant to backpackers, many of whom may be travelling alone for the first time, will fly a family member out to the student in the case of a medical emergency.

"the percentage of travellers who cut their placements short varied between zero and three per cent"

Also, in the case of a student wishing to return home for a short visit during their travels, home visit endorsements are now included in many policies. Phil Anderson, a spokesperson for Insure and Go, told ITIJ that apart from the basic questions asked of backpackers, such as where they intend to travel to and whether they will be participating in dangerous sports activities, a common question now includes whether they intend to visit home at any point during their trip. “Returning to the UK will invalidate their policy unless they take out a home visit endorsement,” explained Anderson.

This is a highly marketable inclusion for travel insurers, as many students suffer from homesickness when away, or have relatives with prior medical conditions whom they may wish to visit at some point during their travels if they plan to be out of the country for some time.

Room for improvement

Most gap-year policies written in the UK are divided into three categories: Europe, worldwide excluding Canada and the US, and worldwide including Canada and the US. However, a student trekking in remote areas of Borneo or Africa is statistically more likely to come to harm than a student travelling in Australia, but will pay the same price for worldwide insurance. Likewise, in June 2007, the Overseas Security Advisory Council (OSAC) released statistics indicating that South Africa has a serious crime problem – with 19,202 reported robberies in the country between April 2006 and May 2007: Tourists who travel there are thus at much greater risk than those who travel to Australia, a country which has been identified by the OSAC as a low crime area.

Ruth Fraser, a 24-year-old makeup artist spent five months in Thailand in 2006. “I had to buy worldwide insurance, but in reality I was in a very safe place. I didn’t move from the island I was on in five months and stayed working in the same place.” Had she been able to tailor her cover to her specific destination, she probably would have been able to pay less for her policy.

Other insurers do offer further categories, which alleviates this problem a little. Insure and Go, for example, offers two further categories of cover including Australia/New Zealand and the British Isles – something that will appeal to buyers.

So, where do these young travellers want to go? STA Travel recently released a statement detailing its top-ten fastest growing destinations for gap-year adventurers, which included Goa, Krabi and Phuket, Panama, Reykjavik, Kilimanjaro, Sandaka in Borneo, Costa Rica, Fiji, North India and Sri Lanka. Tropical diseases such as malaria are endemic in popular third-world destinations and poverty is rife. Whilst it is evident that backpackers are keen on experiencing the more exotic, the question is: are insurance companies taking this into account? Would gap-year policies be more effective and affordable if tailored to specific destinations, no matter how far-flung?

Essentially, a student’s needs are dependent on where they choose to travel. Although insurers will invariably not offer cover for a trip to a destination that is considered dangerous by the Foreign Office, could they not provide a better range of gap-year policies to cater for travel to more specific countries or areas?

geronimoExtreme sports

Jumping out of planes, diving from cliffs and plunging through grade-five rapids on a rubber dinghy are all a part of the modern backpacking experience. Insurers are of course wise to this and make sure such cover is provided where necessary and applicable. Grant Whiskin explains: “Hazardous pursuits are usually listed [in a policy] and what is and is not covered clearly identified. It is highly likely extreme activities will not be covered, though winter sports activities are commonly catered for. On occasion, it may be found that when booking travel from specialist travel companies they, as a matter of course, will provide travel insurance cover that is inclusive of all activities booked by them.”

Insurers usually provide some dangerous sports cover as an integral part of gap-year policies, and do so at no extra charge. However, as Nick Faith, spokesperson for Endsleigh, comments: “There are certain dangerous sports, for example, canyoning, motor rallying and mountaineering, which are not included in [our] general policy. The premium is, however, variable by cover, as well as duration of the trip and destination.”

Gadget cover

Due to the advances in modern technology over the past decade, gizmos and gadgets have become increasingly available to young people. Few backpackers leave their home country without their iPod, digital camera and mobile phone. Consequently, it is important that these travellers understand the importance of having adequate insurance to cover all their valuable possessions.

Richard Mason, director of price comparison website insuresupermarket.com, says: “Typically, gap-year students will be travelling with expensive equipment, so it’s crucial that they have the right level of cover for personal possessions and make sure they check what’s covered.”

Although the majority of travel claims include cancellation, medical and baggage, many cheaper insurance packages don’t, however, offer to replace stolen luggage, money or personal belongings. Most insurers offer different grades of travel insurance with the budget option often not including the replacement of personal items and money. Ace, Insure and Go, Travel Insurance.co.uk and Down Under Worldwide Insurance are all examples of companies who advertise specialist gap-year policies for young people, but do not offer to insure personal items on their lowest priced packages.

The current Facebook generation is interested in using all the technology available to it, to preserve memories, and is eager to keep in touch with friends and relatives. However, David Smith, customer relations administrator for Ace Travel Insurers, says: “Loss or theft is common, but rarely of significant value. Medical expenses, on the other hand, can represent as much as 80 per cent of claims value on schemes of this type. Budget packages are specifically created for those who are taking little of financial value, or have more specific insurance arranged. Overall, 10 to 15 per cent of gap-year travellers choose this option, with a higher proportion choosing it for shorter or European trips.” He adds that the company encourages backpackers to travel light, as gap students with expensive equipment are likely to be targeted by criminals.

"Repatriation is an extremely popular policy inclusion"

Iona Sanders, president of the British Universities Snow Sports Council, encourages travellers to seek insurance with property cover from an insurer willing to make payments: “Accident cover is the most important thing for students taking part in snow sports, but there should also be some sort of loss or theft cover in insurance policies. The British Mountaineering Council offers the best policy I’ve come across for skiers and snowboarders; they cover everything and are not reluctant to make payouts.” She adds: “With 2,500 students on a trip, there are a lot of things that can potentially go wrong. There’ll be a certain quantity that loses their ski gear, and it’s quite common for things to get stolen. We’ve also had issues before with insurers who will find any loophole they can to get out of paying for stolen equipment. For example if a student has left skis in a locker but not secured it properly, insurers won’t pay out.”

Conclusions

Jennifer Oakley, a 23-year-old accountant who took a gap year in 2006, is typical of backpackers for whom insurance is a key concern: “I went travelling for nine months in total, mostly around Australasia. Before I went I researched travel insurance extensively to make sure I got a good deal and that it covered everything I wanted. I looked for policies that included airlifting; extreme sports; low excesses if I did need to make a claim and the option to go home if anything happened to my grandparents whilst I was away. Price was also an issue but I wasn’t prepared to compromise on anything I wanted from the insurance.” Jennifer is typical of today’s insurance-savvy young person seeking insurance cover for their gap-year exploits. Today, these young travellers are increasingly knowledgeable about what cover is available and what kind of cover they should be looking for. For those that still shop on price alone, however, budget policies still need to be widely available.

But, is the replacement of money and personal items the most important element of cover missing in the budget policies? As Smith pointed out, the majority of students choose to insure their personal items, unless they are going on a very short trip. Tiggy Dean of STA Travel PR says: “Baggage claims account for up to 20 per cent of all insurance claims.” Statistics from the Year Out Group estimate the percentage at nearer 30, so realistically all students need to insure their basic belongings before embarking on a trip, even if they plan to travel light. Oakley says: “I didn’t take lots of expensive stuff with me but my case alone was worth £100 and the excess on my insurance was only £50.”

Judging by the popularity of extreme sports, a thorough investigation of the traveller’s plans and needs are also an essential part of the insurance process. Extreme sports cover could be offered with the payment of an extra premium. With the variety of gap-year travel on offer, students need to be able to tailor insurance precisely to their needs. Overall, there needs to be a greater variation of policies covering for specific destinations according to the risks associated with the country and the time spent there.