Snowbirds – an opportunity and a challenge

A crucial market
With 12.2 million Canadians aged 55 years and over, according to the Statistics Canada 2021 Census – a third of the total population – and 93 per cent of this group planning to take out travel insurance for future trips outside of Canada – according to a survey in October 2021 by the Conference Board of Canada – snowbirds are a potentially huge market.

Michael Camacho is President of CSI Brokers, which advises companies on setting up insurance and rewards programs, as well as President of the Travel Health Insurance Association (THIA) of Canada. He said: “I can’t stress enough how important this group is. We’ve also seen a lot of Canadians who have retired early or changed their future work plans because of the pandemic so they don’t have to wait until traditional retirement to travel. We estimate there are about half a million snowbirds in Florida alone.”

They are also a significant group in Arizona. “Around 100,000 homes there are owned or rented by snowbirds, and they spend $1.5 billion a year here, in addition to the $1 billion spent by other Canadian tourists,” said Glenn Williamson, CEO of the Canada Arizona Business Council.

Although these figures for Arizona are based on pre-pandemic levels, and latest Statistics Canada data shows that the number of Canadians returning from trips to the US in August 2022 was 63 per cent of that seen in August 2019 before the pandemic, snowbirds are likely to be returning to foreign travel more quickly than Canadians as a whole. They’re very dedicated.

Even when US land borders were closed to tourists during the pandemic, many snowbirds – especially those who own property in the US – were determined to get there to escape the Canadian winter. Services sprang up that allowed them to take a helicopter ride across the border where they would pick up their car, which had been transported over, to continue their journey.

Snowbirds are so important to the American economy, a Canadian Snowbirds Act bill has been introduced in the Senate that, if passed, will allow Canadians over 50 who own or rent a home in the US to spend eight months in the country each year, rather than the current six months. This will be particularly beneficial as the tourism industry in states like Florida attempts to recover from the pandemic.

Individual Canadian provinces may require residents to be present for five months or more each year to remain eligible for provincial health insurance, however, so an agreement on this will need to be reached.

Importance of travel health insurance
In the 1990s, Canadian governments looking to make savings began to cut maximum amounts that could be claimed for medical expenses abroad under their provincial healthcare plans, so these are unlikely to cover the costs if travellers face a medical emergency.

“It’s essential for snowbirds to have travel insurance. Provincial healthcare plans cover a mere 10 per cent or less of emergency medical costs outside of Canada,” commented Kathy Starko, President of Canadian travel insurance provider TuGo. “With medical costs continuing to rise, it’s never been more important. For instance, one overnight stay in a US hospital might cost $16,000. Not having adequate travel coverage could put a financial burden on these older travellers, potentially impacting retirement plans.”

As snowbirds are generally older, they’re more likely to have or develop medical conditions than the average traveller, especially if they’re away for months at a time. They may need cover for pre-existing conditions such as high blood pressure or diabetes and, if retired, won’t have extra health coverage through an employer.

While the vast majority of snowbirds take out travel insurance, there’s still a proportion that don’t. This could be because of the belief they can drive back to Canada if they fall ill, the incorrect assumption they’re covered by provincial health insurance, they think it’s too expensive or simply forget.

Some may also think they’re covered by credit card travel insurance, but once a cardholder turns 65, certain trips are no longer covered. Even for travellers under the age of 65, credit cards won’t generally cover getaways of more than 31 days.

Pre-existing medical conditions
As snowbirds tend to be older, getting cover for pre-existing medical conditions is a concern for many. They may be dealing with chronic conditions or have a complex set of medical needs.

This is generally straightforward as most conditions will be covered if they’ve been stable, with no changes to the condition or medication, for a specific period before departure date. The length of stability period could be 90, 180 or 365 days, depending on the insurer, policy and condition. There are also policies that cover all conditions without stability clauses or unstable conditions, but these are more expensive.

Insurers have developed sophisticated methods of assessing pre-existing conditions for underwriting purposes, including health questionnaires and rating tools, but snowbirds could encounter problems if they need to make a claim and haven’t disclosed all the relevant information.

“Regulators are very concerned about coverage certainty,” said Will McAleer, Executive Director of the THIA. “Nobody wants a situation where someone finds themselves without cover because they didn’t spend time making the proper declaration. Generally, this market is very educated and used to getting this type of cover – but for coverage certainty, you first need to understand your health. And the more conditions you have, the more challenging this is.

“If you have a medical change – medication is reduced because you’re getting better, for example – this still needs to be disclosed. If you don’t declare something, some insurers will say it’s misrepresentation or it might affect the deductible.” TuGo applies a deductible of US$15,000 if there’s a mistake on the questionnaire rather than rejecting the claim, which could cause financial ruin.

To get all the information they need, insurers should make sure customers fully understand the health questionnaire and that the completed version is shared with the customer to review before the policy is put in place. Insurers should also check whether there have been any changes between the policy being taken out and the departure date, as it may have been bought months beforehand.

There are certain situations where travellers won’t usually be covered, relating to cancer or a terminal illness, they’re travelling against doctor’s orders, tests are required, or waiting for surgery.

The pandemic effect
With trips having to be cancelled due to the effects of Covid, and staff shortages leading to airport delays and baggage mix-ups, the pandemic has raised the profile of travel insurance.

“The percentage of people who purchase some sort of travel insurance has increased post Covid, as it did after other events like volcanic ash clouds,” commented Senior Vice President for comparison site InsureMyTrip.com, Suzanne Morrow. “You see a spike, then it levels off, but at a higher level than previously.”

Snowbirds are likely to be returning to foreign travel more quickly than Canadians as a whole

However, medical cover is still the main consideration for snowbirds. She added: “Those with RVs or second homes are less likely to have costs if their trip is cancelled so are not looking to get trip costs back.” Many also drive to their destination, avoiding flight spend.

InsureMyTrip doesn’t currently offer insurance to Canadians where a medical questionnaire is required, which is the case when a traveller is above a certain age or has medical conditions, so can’t cater for most snowbirds, but is planning to do so in the future.

Brokering the best deal
Many snowbirds use brokers to find the best policy, and specialists, such as Snowbird Advisor Insurance, cater specifically to their needs. According to the Conference Board of Canada, 42 per cent of travellers over 55 years old, surveyed in 2020, bought cover through an insurance company or broker, while 49 per cent said they intended to in a 2021 survey. A sizeable proportion (22 per cent) also intended to buy it through a membership association – far more than for any other age group.

Individual Canadian provinces may require residents to be present for five months or more each year to remain eligible for provincial health insurance

The Canadian Snowbird Association recommends a specific insurer – Medipac Travel Insurance – but there’s a wide range of options available.

“There’s a more savvy cohort looking at online comparison sites or going online generally,” said Camacho. “They’re doing their homework before purchasing, and comparing reviews from previous customers. It’s not always about cost – value is important.”

Policies for snowbirds are generally sold fairly with few problems, but there will always be situations where people don’t get the right cover, which the industry is working hard to avoid. “A lot of disputes are due to non-disclosure of pre-existing condition changes,” added McAleer. “That’s where education comes in, to ensure proper disclosures.”

It’s clear that snowbirds will continue to be a significant market for the industry, especially for travel health insurance, so those that can serve their needs will inevitably be at an advantage.