Industry Voice: Pre-existing medical conditions are no barrier to travel

There is a significant long-term challenge in addressing these waiting lists, so the situation is likely to persist for some time. Indeed, the latest figures show that about 6.3 million people in England are currently on NHS waiting lists, about 3.2 million of whom have been waiting for longer than 18 weeks.

This backlog has, in many cases, led to a situation where, somewhat perversely, the more minor the medical condition, the longer the waiting
time, and so the more difficult it is for travellers to get
insurance coverage.

Travellers with pre-existing medical conditions may, in many cases, be more anxious to have insurance coverage to provide them with a safety net should they need medical assistance while on holiday. This makes them more likely to declare their condition to a potential insurer, which may in turn result in them being denied coverage. Those customers then face the difficult choice of travelling without insurance cover for all their conditions or not travelling at all.

In 2023, a Which? survey found that ‘pre-existing medical conditions’ was the reason for more than a quarter of refused claims on travel policies, making it the second most likely reason for a claim to be refused behind policy exclusions (at 32%). But specialist insurers have access to data, insights and the expertise to shoulder the risk and underwrite coverage for these travellers, offering them peace of mind when they are abroad. With insurance coverage in place, travellers can feel secure knowing they’re covered for medical attention or evacuation during their trip if needed.

Tackling the issue
The UK Financial Conduct Authority (FCA) has been working hard to find ways to close the gap between the number of potential travellers with pre-existing conditions awaiting treatment while wishing to travel and the availability of insurance coverage for them. In 2021, the FCA introduced requirements intended to help improve access to travel insurance for consumers with pre-existing medical conditions.

Those so-called ‘signposting’ rules require firms such as retail travel insurers, banks that offer travel insurance as part of a package, trade associations, and charities to point consumers to a directory of specialist firms that can offer them coverage if a £100 premium threshold is hit.

In April this year, the FCA published the results of a review into the signposting requirements and reported that, overall, it believed the requirements had had a positive impact, albeit at a lower volume than expected. The FCA said that about 21,000 additional policy sales could be attributed to its intervention – a move in the right direction but lower than the 32,000 additional policy sales estimated in its cost-benefit analysis of the directory.

And despite an uptick in policy sales to travellers with pre-existing medical conditions, there is still a great deal of work to be done to improve access further, the FCA concluded.

Customer charges
The regulator also noted that in many cases the premiums charged to consumers with pre-existing medical conditions were noticeably higher than those for policyholders without pre-existing conditions. In certain circumstances, if firms are earning percentage commissions without an absolute cap, customers may not be getting fair value – something it says it will look into further.

The FCA’s review also found that of the sample of 73 firms it studied, only 90% were compliant with the signposting requirements. It will take further action to address this, it said.

And the FCA said it plans to consult later this year on updating the £100 trigger point. It noted that the trigger level may need to be raised to reflect the increase in risk costs, medical costs and claims. Too low a trigger, the FCA noted, may have the unintended consequence of sending more enquiries than necessary through the directory, potentially reducing options for the very customers the directory is intended to help.

The FCA’s efforts have certainly helped to highlight this issue and, we hope, improve access to travel insurance for those consumers with preexisting medical conditions who wish to take a break.

For travel insurers, consumers with pre-existing health conditions may seem like a riskier category of insured. But gaining confidence about how to underwrite these travellers at an affordable premium, commensurate with the risk, is possible.

From a travel insurance standpoint, there are three main categories of insured:
• Healthy travellers with no underlying conditions and no need to declare any health issues to the insurer – these are the most common
• Travellers with diagnosed health conditions, where treatment is ongoing or completed, who undergo a formal risk-assessment process to determine the premium impact of covering their diagnosed conditions
• Travellers with pre-existing, undiagnosed or untreated conditions who disclose them to ensure adequate coverage for potential emergencies during their holiday.

It is the third category that poses a challenge for insurers that may be uncertain about accurately rating the risk. However, risk-scoring tools exist to provide insights into travellers’ conditions and the associated risks of their chosen destinations. These technologies can help insurers to gain confidence about these travellers’ risk profiles. Typically, insurers offer coverage to these consumers that is broadly similar in scope and cost to that offered to policyholders with diagnosed conditions.

Despite an uptick in policy sales to travellers with pre-existing medical conditions, there is still a great deal of work to be done to improve access further

It is greatly important to people’s wellbeing to be able to go on holiday with insurance cover for every eventuality. This is perhaps even more important for those travellers with untreated or undiagnosed pre existing health conditions, who may be anxious about travelling without insurance to cover them should something go wrong.

Insurance gives those travellers with pre-existing health conditions the confidence to travel, knowing that coverage is in place.

The key is for travellers to declare any medical issues in advance of their trip so that insurers can ensure that coverage is suitable to their requirements and includes provisions for medical evacuation should that be necessary.

The issue of lengthy waiting lists is unlikely to go away any time soon, and the travel insurance market needs to find a solution to this problem.

We welcome the FCA’s efforts to address this issue and guide consumers with pre-existing conditions toward insurers equipped with the expertise to give them the confidence to pack their cases and jet off for a well-earned break.