Destination risks: where do travel insurers' responsibilities lie?

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Risk factors

In light of the latest states of unrest in different parts of the world, Milan Korcok asks where insurers’ responsibilities lie when it comes to warning travellers of the risks inherent in their destinations   

The massacre of a defenceless Mormon family by Mexican drug cartel assassins on 4 November in the state of Sonora, just a few miles south of the US border, is just the latest in a string of bad news stories coming out of the seventh most popular tourism destination in the world*: a paradox hard to explain. Had the victims of the Sonora attacks been American visitors from Colorado, Texas, or Missouri, travel insurers would have been be poring over their policy exclusions to see how vulnerable they might have been to serious cancellation claims. As it was, the nine victims (six of who were children, two of them not yet old enough to walk) were dual American/Mexican citizens (descended from mostly American roots) and respected residents of a Mexican farming community who were on their way to an extended family wedding. Initial investigations suggested it was not a targeted hit but that their three-car caravan just happened to be in the wrong place at the wrong time.

World alarm

Are travellers truly aware that their benefits can be cancelled out if they travel into zones their government has warned them against?

For Mexico, this is not an unusual occurrence. Stories of innocent victims being brutalised and killed either deliberately or as collateral damage in drug-fuelled turf wars make headlines in media outlets around the world almost weekly. Yet tourists keep coming – about 41 million are estimated to have arrived in just the first eight months of this year, 60 per cent of them Americans and 1.6 million Canadians. That’s over seven per cent more than last year, despite the fact that Canadian, UK and US governments have advised their citizens to ‘Avoid all Travel’ or ‘Avoid Non-essential Travel’ to 15 of Mexico’s 31 states. 

Sonora is an ‘Avoid all travel’ zone, as is the state of Tamaulipas, across a small bridge to Texas’ Rio Grande Valley, where thousands of American and Canadian snowbirds spend their winters, and where one of their primary activities is going over the river to Mexico to buy trinkets in tourist stalls and have lunches they brag about to their friends at home. Are they really unaware that by one unavoidable incident they might be stripped of critical medical benefits they literally ‘bet their lives on’ when they bought their snowbird insurance? Do they really believe that because they are innocent, well-meaning tourists, they are invincible? Or do they think about that at all? 

The warnings governments post for citizens travelling abroad are not deep state secrets. They’re not merely suggestions. ‘Avoid all travel’ is not an ambiguous message. And it is clearly visible on warning systems available to anyone within reach of a smartphone or laptop. But are those warnings simply drowned out by the seductive tourism images of Paradise Realised? Are travellers truly aware that their benefits can be cancelled out if they travel into zones their government has warned them against? And are insurers doing enough to protect their clients?

For travellers, the issue of safe spaces, security, and access to reliable information is more important than ever

Global threats
During this past summer, it was not only Mexico that was hurt by messy headlines. So was the Dominican Republic, where a spate of alleged random poisonings at high-end resorts had tourism reservations plunging – at one point up to 70 per cent. These patrons were also in the wrong place at the wrong time, as were the many travellers caught up in, or witnessing, civil disobedience events, protests, demonstrations and, in some cases, deadly riots, in Indonesia, Catalonia, Paris, Hong Kong, Chile, Ecuador, Haiti, Algeria, Moscow, Lebanon, Egypt, Bolivia, Jordan, even London, and on and on. And let’s not forget that China also has warned its citizens of the risks they face in travelling to the US, citing exorbitant medical costs, gun crimes, robberies, and muggings. 

For travellers, the issue of safe spaces, security, and access to reliable information is more important than ever. Increasingly, government travel advisory services have been refining their own warning systems and emphasising the critical role travel insurance plays in protecting their safety for any international travel. And these warnings are becoming very proactive – far more than just ‘don’t forget travel insurance when you leave home’.  

The UK Foreign and Commonwealth Office (FCO), US State Department, Global Affairs Canada, Australia’s Department of Foreign Affairs and Trade, and New Zealand’s Ministry of Foreign Affairs and Trade have a long tradition of sharing foreign intelligence through their ‘Five Eyes’ alliance (see sidebar). The latter four of this group have evolved their advisories into a four-tier alert paradigm:
1) Exercise normal precautions. 
2) Exercise increased precautions. 
3) Avoid non-essential travel or reconsider travel.
4) Avoid all travel. 

Emergency button

Governments promote travel insurance
One common message prevalent through the Five Eyes partnership is an emphasis on the need for all travellers to have insurance, to examine and understand their coverage limits, and particularly to understand the pertinence and importance of the advisory levels. They all state quite clearly that travelling into high-risk zones (Levels Three and Four) could invalidate all, or parts, of the insurance coverage travellers pay for.
The New Zealand government’s Safe Travel site has a particularly well-crafted exposition of travel insurance – it details the types of plans available, questions to ask, and examples of situations abated by insurance. It is proof that travel insurance can really be explained thoroughly, clearly from the purchaser’s point of view, and in plain language – even the hard parts.

Are insurers responsible? 
What, then, are the agents’ or sellers’ responsibilities in warning their clients of the risks they face while enjoying their seasonal idyls in the sun, or on the slopes, or at the metropolitan attractions of New York, Paris or Singapore? In an article published in ITIJ in February 2017 (Issue 194), it was reported that no UK or EU legislation governs how much information tour operators must provide their clients about countries they intend to visit, and it emphasises that travel agents cannot be expected to have detailed knowledge of the security situation in each country, beyond that which is provided by governments. 
Citing a California court decision (McCollum v. Friendly Hills Travel Center) the ITIJ article notes that the decision in that landmark case recognised that though a travel agency has a duty to warn consumers of any dangers of which it is aware, ‘the law requires only that agents be loyal, not prescient’.
Travel industry lawyer Mark Pestronk, legal briefs columnist for the US-based publication Travel Weekly, goes a step beyond and writes that, in general, agents should warn their customers about destination dangers they know about or should know about, but that the client would not ordinarily have knowledge of, ‘although there are no hard and fast rules about what agents need to disclose’. Pestronk notes: “If there’s something there that would give rise to a duty to warn … and there was nothing in the general media about it, then I would say, yes, absolutely there would be a duty to warn.”
Might that information scupper a sale? 

Increasingly, government travel advisory services have been refining their own warning systems and emphasising the critical role travel insurance plays

Perhaps. But then customers come to their insurance providers for protection. And they’re not going to stop travelling after one disappointment. They’ll likely just change their ticket to another destination, or as many appear to be doing, hang on to the belief that they are above it all.
Writing in the trade publication Travelmarkets Report (5 December 2018), Paul Ruden, former Executive Vice-President for Legal and Industry Affairs for the American Society of Travel Agents, notes that the general trend in court opinions is that the travel adviser is a fiduciary in relation to his client. “All things considered,” adds Ruden, “were I in the retail business, I would remind all clients of the basic rules of self-care when travelling to destinations with which they have little or no familiarity. I would apply this approach most rigorously if there were recent reports of particular acts of violence, sexual or otherwise, involving tourists … And if I were aware of seriously problematic events at the destination, I would also reference recent press reports and the State Department advisories.”
He concludes: “That is the best one can reasonably do in the circumstances … (and) if the client is looking for an ‘adventure’, the information provided may easily be overlooked or discounted. But at least you provided a basis for a better outcome.”

It’s not going to get any easier
Unless one believes that the global upheavals of recent months are seasonal aberrations and that we’ll soon get back to a state of ‘normality’, travel providers, including insurers, might well have to become more active when it comes to advising their clients about their travel plans. Simply warning them about the exclusions in their benefits will not be sufficient. They may have to become geo-political mentors as well as protection providers in order to keep their clients from getting into the wrong place at the wrong time. ■