The world in flux

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guardsWith details of political and civil unrest consistently filling news pages, it is no wonder that global travel insurers have been tightening up their provision of cover and tailoring specific plans to provide relevant evacuation and cancellation cover in recent years. Robin Gauldie looks at what’s currently on offer

War, acts of terror and civil unrest are probably affecting decision-making by holidaymakers, business travellers and expatriate workers – and their insurers – to a greater extent than ever before. Television and newer media deliver images of riots, shootings or bombings in countries that until recently have been thought of as  relatively secure, mainstream holiday destinations. This is especially true of Egypt, whose image is affected not only by its own internal crisis, but by spill-over from its strife-torn near-neighbours, Libya and Syria. Even the reputations of less exotic destinations such as Greece, Turkey and Bulgaria have been dented by widely televised scenes of demonstrations turning violent in their major cities.

Such media coverage, however, can be uneven and may unduly influence travel decision-making. Countries such as Turkey, Egypt and Greece may be prominent in the brochures of European tour operator giants such as TUI and Thomas Cook, but their clients often have little grasp of the geography or politics of such destinations. Confronted with images of tanks on the streets of Cairo, riot police beating demonstrators in Istanbul, or ‘anarchists’ hurling petrol bombs in Athens, ordinary holidaymakers may find it hard to decide whether they should cancel a holiday in resort areas such as Sharm el Sheikh, Bodrum or Corfu – many miles from the epicentres of such unrest, and (touch wood) largely unaffected.

Where can they turn to for advice, then? How reliable is this advice? And what can travel insurers do to assist those who find themselves at the mercy of conflicting travel advice? With such a wide range of travel policies on the global market with regards to the coverage they offer relating to civil or political unrest, isn’t it time for a little more consistency?

Cover questions

When trouble starts, would-be travellers may turn to the travel advice issued by their government. But that, too, can cause problems when governments around the world vary their warnings about travel to certain countries. The Egyptian situation highlights this issue. This summer, some tour operators were criticised for   invoking hefty price penalties on British clients who wanted to cancel their Egyptian holiday or rebook for a less troubled destination, while allowing their German clients to do so without charge. This, they said, was because the British Foreign and Commonwealth Office’s (FCO) official advice on travel to Egypt differed from  that issued by its German counterpart. The German government warned its citizens against visiting Egypt in mid August. By 15 August, the US State Department warned its citizens to defer travel to Egypt and advised those already in the country to leave. But as of 15 October, the British FCO advised only against all travel to the troubled North Sinai region and all but essential travel to much of the rest of the country, while advising those planning to travel to the popular seaside resorts of the Red Sea coast, the Gulf of Aqaba, and the world heritage site of St Catherine’s in the Sinai, to see its latest advice before travelling. As a result, tour operators such as Thomas Cook maintained that normal booking conditions for many key tourist destinations in the country – including cancellation fees – would apply to their British operations. Putting her money where the company’s mouth is, Sarah Anderson, a spokesperson for Thomas Cook, was booked for a family holiday in Sharm el Sheikh when she spoke to ITIJ at the beginning of September. In any case, apprehensive holidaymakers who cancel or change their travel plans where no travel warning has been issued for their resort or region can expect little redress from their tour operator. But some travel insurers offer a helping hand in such situations – as long as specific cover has been purchased.

"Fear of an event is not a covered reason in the US for trip cancellation, unless one purchases a Cancel for Any Reason policy"

“In general, civil unrest is not covered by most travel insurance policies,” confirmed Linda Kundell, a spokesperson for the US Travel Insurance Association. Kundell points out that the travel insurance market in the US is quite different from the UK, though. “Fear of an event is not a covered reason in the US for trip cancellation, unless one purchases a Cancel for Any Reason policy. A terrorist event occurring within a set period of days (often 30) is covered under certain policies, but that is considered different from civil unrest.” Travellers who need to leave but find it difficult to do so – for instance, if an airport is closed – may have some coverage  under the trip interruption part of their policy. Civil and political unrest, though, are typically not covered under standard leisure travel insurance plans offered by US providers, says Kundell. However, business travel insurance provided for employees by large corporations or even small and medium-sized enterprises are becoming more popular in the US, she says. Some of these plans include varying levels of available coverage of security evacuation for such events. Some student plans may also cover evacuation, and some companies do include nonmedical evacuation in their leisure policies. As in most markets, the trigger for US travel insurance policies that offer non-medical evacuation generally involves recommendation from the local authorities or the US State Department to leave the country. And in the US, there have been increasing requests from corporate entities for assistance and security evacuation solutions for business travellers, according to  Linda Kundell: “Insurance companies that offer business travel accident policies typically do have evacuation provisions and work with providers who can evacuate travellers in situations of political unrest, natural disaster or a general security-related (non-medical) incident,” she said, adding: “Many assistance companies offer travel risk management services that combine both medical and security evacuation, along with other related services like travel risk intelligence, traveller tracking, and such like, which specifically address this need.”

When a crisis develops, who makes the decision to evacuate, though? This depends on the programme that the client company and its insurers have in place, Kundell says. “The company itself may decide when they wish to evacuate, making this decision based on their interests in the affected area, along with intelligence and insight provided by their travel risk management provider, who would give guidance based on local intelligence, previous experience and the needs of the company. If the company programme is governed by an insurance policy, the policy has language that stipulates the conditions under which the evacuation benefit would apply.” She went on to clarify: “Typically, it’s once the US State Department has issued a formal travel warning, like they recently did for Egypt. Often, companies wish to have more control over when the decision to evacuate takes place. This way they can better manage the evacuation, especially when many employees, local nationals and expats are involved and everyone is trying to evacuate at the same time.”

StatueIndustry variation

“We do not offer travel or trip interruption coverage,” states Marnie Goodman, communications director of Aetna International, a US-based provider of international health insurance for expatriates. “Many of our international health coverage plans for expatriates do include coverage for evacuation, but the coverage is for medical emergencies or treatment when there isn’t an appropriate medical facility at the member’s location.” RoamRight, on the other hand, does offer trip cancellation coverage in relation to civil and political unrest, but only in the event of a terrorist attack occurring in a city listed on the traveller’s itinerary within 30 days of departure. It does, however, offer coverage ‘to evacuate you to the nearest place of safety and then to your home’ in the event of ‘a political emergency situation due to government or social upheaval while travelling in a foreign country’, explained the company’s senior vice president, travel, Linda Fallon.

In the UK, American Express’s standard Annual Multi Trip Essential policy provides cover ‘if you need to cancel your trip before you leave or curtail your trip having departed, subject to terms and conditions’. Like most insurers, these terms and conditions are very specific. Amex makes no mention of cancellation of the trip due to civil unrest, although the policy explicitly covers the insured for curtailment due to the unforeseen illness or death of the insured or a travelling companion; being empanelled for jury service or subpoenaed for court action; or accidental damage at the insured’s home address.

In the US, Travelex’s Travel Basic policy offers trip cancellation and interruption coverage of 100 per cent of the trip cost under specific circumstances, and does cover against trip delay due to civil disorder. But the wording leaves moot the definition of civil disorder – and it specifically excludes ‘declared or undeclared war or an act of war, civil disorder and travel warning / alert’ from all benefits except its trip delay coverage. That seems to mean that the policy will not even cover insureds whose holiday is cancelled on the advice of the US State Department.

In a statement issued after the US State Department’s issue of a global travel alert on 2 August, Travelex said losses directly related to the travel warning would not trigger coverage under trip cancellation or trip interruption. The company said at the time: “However, if the traveller is delayed due to a covered reason such as delay due to civil commotion or riot causing 50 per cent or more of the covered trip to be missed, this would be eligible for coverage (except on Travel Basic). Additionally, if the travel supplier cancels the trip due to these conditions, the traveller may be reimbursed for the reissue fee charged by the airline, up to the maximum benefit amount as stated in the policy details.”

"Often, companies wish to have more control over when the decision to evacuate takes place"

The level of cover offered – and the caveats applied – by travel insurers in other markets is similar. In Australia, Allianz Global Assistance’s standard comprehensive policy offers ‘unlimited cover for cancellation fees and lost deposits’, but only if the loss is due to ‘unforeseen circumstances neither expected by you or which are outside your control’. The terms and conditions specifically exclude ‘you or your companion changing plans’ and any claim which ‘arises directly or indirectly from an act or threat of terrorism’.

terrorismCancel at will

With standard policies generally offering no recourse unless the insured’s own government advises against all travel to a destination, or recommends leaving the country, there has been an increase in sales of ‘cancel for any reason’ policy upgrades in recent years, notably in the US. Unlike standard travel insurance policies, these compensate insureds who choose not to travel even if their government advises that a destination is still safe to visit. While offering the insured more flexibility in deciding when and why to cancel – for example, due to fear of civil unrest or terrorism – these policies come at a substantial cost, and do not usually provide cover for the full cost of cancellation. Typically, they will reimburse as little as 75 per cent of the trip cost, with a few providers offering cover for up to 90 per cent – a necessary disincentive to deter insureds from cancelling on a whim.

So, the onus of evacuating and compensating travellers whose holiday is cancelled due to civil unrest still seems to remain largely in the hands of travel suppliers and travel industry umbrella organisations. Meanwhile, those who wish to take the decision of whether or not to travel to a troubled destination into their own hands may increasingly look to trade up to policies that allow them to cancel for any reason.