The US Centers for Disease Control and Prevention (CDC) has made proof of a negative Covid-19 test pre-departure mandatory for all inbound travellers to the US. The impact of the Covid-19 pandemic on the travel insurance industry has been immediate, with as much as a 90-per-cent decrease in business, according to US-based travel insurance comparison site Squaremouth. Before, Squaremouth reports, consumer confidence was nearing pre-pandemic levels, reporting staggering 864-per-cent increase in purchases since the start of the pandemic to the current day. New travel trends, discounts, and the availability of a vaccine undeniably contribute to growing consumer confidence.
US travellers favour the Caribbean over Europe
Despite widespread border closures, Squaremouth says travellers still favour international trips. Since the pandemic began, 67 per cent of travel insurance policies have been purchased for travel to other countries.
A surge of travel to ‘open’ destinations proved that travellers still found a way to leave the country. Squaremouth’s current list of top destinations, once ruled by European countries, now heavily consists of Caribbean destinations that remained open to US travellers, including Mexico, Costa Rica, Turks and Caicos, and the US Virgin Islands. These countries now require US citizens to show a negative test before returning home.
Vulnerability of the travel industry
Squaremouth says the new negative Covid test rule came at a time when travellers were starting to feel comfortable with travelling again, reaffirming the ongoing vulnerability and unpredictability of the travel industry.
While travel insurers are taking steps to meet new and evolving traveller concerns, this announcement proves it is a moving target. Showing a negative test for re-entry is just the most recent hurdle travellers need to navigate. It joins previous reasons, like border closures and quarantine rules, that are deterring travellers, and are not covered by standard cancellation travel insurance policies.
Demand for CFAR cover skyrocketed
For this reason, Squaremouth continues to recommend travellers consider purchasing the cancel for any reason (CFAR) upgrade. Prior to the pandemic, demand for CFAR cover was low, accounting for only 3.5 per cent of Squaremouth sales in 2019. Following the pandemic, this has skyrocketed to 17 per cent.
“We never recommend travellers pay more for this coverage unless they have a very specific concern that we know isn’t otherwise covered,” says Squaremouth CMO Megan Moncrief. “But in today's travel climate, CFAR just gives travellers the biggest safety net as more unknowns become reality.”
InsureMyTrip also heavily recommends that customers be steered towards CFAR offerings. “This upgrade offers the most trip cancellation flexibility and is the only option available to cover fear of travel,” the company noted in a press release.