For the first time in 40 years, the British people will decide whether to leave or remain in the European Union (EU) in a referendum on 23 June. But what would a British exit (or ‘Brexit’) mean for the travel industry and travel insurance within Europe? As the Association of British Travel Agents publishes a report to say that a Brexit would make European trips far more expensive and trigger a slide in sterling, Bronwen Courtenay-Stamp, head of travel and insurance at legal firm Trowers & Hamlins, gives her view
One of the key benefits of being a member of the EU is the ease with which member nationals can move from one member country to another. Brits join the ‘EU Nationals’ channel at border control, flash their passports and through they go. A Brexit could result in some European countries requesting visas to pass through their borders. Not overly complicated if you are flying to Madrid, say, but if you are taking your car abroad and are planning to drive across several countries the situation may become increasingly complex. This would be true not just of tourists but also of business travellers and UK citizens working abroad.
Another benefit of being in the EU is where Brits fall under common EU regulations should things go wrong. Take the European Health Insurance Card (EHIC) as an example: the EHIC is available free of charge and is valid for medical treatment in state-run hospitals and from GPs in all 28 EU countries, and in Iceland, Lichtenstein, Norway and Switzerland. It allows the holder access to the same free medical treatment to which local nationals are entitled. Where a local would pay for treatment, so would an EHIC holder.
If Britain were to leave the EU there is no guarantee that UK citizens would continue to be able to use the EHIC. If not, they may have to resort to travel insurance, which in turn may result in a higher number of health-related claims and, eventually, increased costs of premiums.
British people are also covered by EU law should they have an accident somewhere in Europe, and when they buy products or services while abroad. If some or all of those protections disappear post a potential Brexit, as with the EHIC, Brits could be more reliant on travel insurance with the same potential for increased costs of premiums.
Air passenger benefits
In addition, after a long, hard battle with the airlines, EU citizens now enjoy greater protection should their flights be delayed. Before the ruling, airlines could fall back on the excuse of ‘extraordinary circumstances’ as the means to avoid paying compensation for delayed flights. Now, as a member of the EU, a passenger can make a claim if their flight is delayed for more than three hours. Travellers may be able to claim as much as €600 plus expenses per person and claims can be made retrospectively.
This is not just for flights in and out of Europe – it also applies to flights run by EU-based airlines to other parts of the world. Again, it is entirely hypothetical because there is as yet no agreement, but would Britain enjoy the same privilege were the UK to leave the EU?
There may also be financial ramifications to a Brexit. At the moment there is pan-European agreement on landing fees for airlines throughout the EU. If Britain were to leave the EU, there is no guarantee that UK air carriers would remain as part of that agreement, with the likelihood that landing fees would rise for those carriers – which in turn may mean more expensive flights for UK citizens. This is one reason why the owners of UK airlines such as easyJet have come out in favour of the ‘In’ camp.
The recently published report on the potential impact of a Brexit on travel, compiled by ABTA in association with Deloitte, certainly supports what we believe a Brexit might bring. From the value of sterling to the cost of holidays, restrictions on freedom of movement and the effect on recruiting from overseas, if we leave the EU we may well lose a number of travel benefits which until now we have taken for granted. A Brexit could mean an increase in the costs of holidays and there is no guarantee that, after a Brexit, Britain could continue to enjoy recently-achieved pricing agreements on mobile phone roaming charges. Another implication could be how Sterling performs against the Euro. At the moment any changes in value up or down are relatively stable, but could a Brexit result in more volatile differences in exchange rates?
It is too early to predict for certain how many, if any, of these issues would arise should Britain leave the EU. These are our considered guesses based on what we know so far. In any case, we have four months of debate and lobbying before Britons are asked to share their views in the referendum on 23 June and after that we may still remain a member state of the EU, with all the travel benefits and protection that brings.
Bronwen Courtenay-Stamp is head of the travel and insurance team at Trowers & Hamlins incorporating Stones. The team recently received the International Legal Services Provider of the Year Award at the International Travel and Health Insurance Journal Awards in Athens.