Coronavirus: insurers respond as airlines cancel flights across the world
Italy remains on total lockdown; airlines cancel thousands of flights worldwide; and Vietnam suspends visas on arrival for the UK and European Union (EU) countries
Globally, there have now been over 119,270 confirmed cases of Covid-19, with 65,788 recoveries and 4,287 deaths.
The growing number of coronavirus cases in the Western world has stirred up unease in Vietnam. After 13 passengers (nine foreign nationals, seven British) flying from London to Hanoi tested positive for Covid-19, leading to a sudden spike in cases in Vietnam, the country has orchestrated emergency suspension of visa-free arrangements for the UK, Germany, France, Spain, Denmark, Norway, Finland and Sweden. All of the passengers who travelled on the aircraft are now under quarantine.
Indeed, while Covid-19 has reportedly stabilised in China, the number of cases in the US now exceeds 1,000, with 23 of the country’s 31 deaths having occurred in Washington. Cases have also now been confirmed in every member nation of the EU, and Italy, the worst affected country outside of China (now with over 10,100 confirmed cases and over 630 deaths), remains on lockdown – schools are shut, public spaces and tourist attractions closed, and usually-busy spaces are left eerily quiet as people stay home.
Moreover, airlines throughout the world have cancelled flights to Italy and around the world. Ryanair, easyJet, British Airways and Thai Airways are among those that have scrapped flights to the country following official travel advice and a fall in demand from holidaymakers anxious to put their travel plans on hold.
Although many firms are simply following advice from their national advisory boards, the slump in demand is having a massive impact on airlines’ profits. Many, such as Norwegian Air, which is due to cut about 3,000 flights in the next three months (15 per cent of its capacity), has announced that it plans to lay off a ‘significant share’ of its workforce. Australia’s Qantas airline has said that it will be reducing international flights by about 25 per cent as demand falls, and ACI Europe, which represents European airports, said its ‘initial assessment’ was that passenger numbers between January and March would drop 14 per cent due to the coronavirus.
This turmoil in the aviation industry comes just a week after Flybe was forced to go into administration. “As we saw with Flybe, some airlines, particularly smaller ones, can bleed through money quite quickly. Although they've cancelled flights, they aren't making up those revenues because of falling customer demand," warned aviation consultant John Strickland.
And following this news of flight cancellations worldwide, London-based insurance provider Aviva has announced that it is adjusting its policies to reflect the current risk posed by the coronavirus.
“Insurance is designed to provide cover for unforeseen and unexpected events and is priced on this basis,” the company said in its statement. “The outbreak of the coronavirus means there is an increased likelihood of disruption to people's travel plans."
Aviva asserts that while people will still be able to buy its travel insurance, they will no longer be able to add cover for travel disruption. Although customers who bought travel insurance before Monday will still have the full cover.
The insurance company’s move highlights a growing concern in the insurance industry over the escalating costs associated with travel problems caused by the outbreak. In fact, Sportscover Direct, a specialist travel insurance provider, has also now announced a coronavirus exclusion that applies to all policies sold after 11 a.m. on 9 March.
A message on the company’s website read: “It is understood and agreed that this insurance does not cover any loss, damage, liability, cost or expense of whatever nature directly or indirectly caused by, arising out of, contributed to by, or resulting from ‘COVID-19’ or any mutation or variation thereof.”
While there are still insurers offering more comprehensive cover, it will be interesting to see how the insurance industry’s response to the Covid-19 outbreak develops.