On 24 November, the European Parliament adopted legislation that allows European Union (EU) consumers to launch group action lawsuits against companies they believe have wronged them. The measure is due to become law across all 27 member states within the next two years.
While similar to US-style class-action lawsuits, the new ruling to be implemented will not allow law firms to initiate the collective redress lawsuits (although consumers can), and will not give scope for punitive damages to be demanded beyond the actual losses incurred. The European Parliament believes that this will help avoid some of the more excessive aspects of the system in place in the US.
What does it mean for travel insurers?
Travel insurers will likely have been keeping abreast of consumer gripes over travel insurance the last few months. True, the travel insurance industry has had to do a lot of adapting this year, and with the goal post constantly changing. But many consumers, especially those in the UK, have felt let-down by unclear policy wording this year, and are facing financial hardships of their own.
While the UK will no longer be a part of the EU come 2021, it seems incredibly likely that consumer sentiments to travel insurance coverage over in Europe won’t be too dissimilar to those in the UK.
“European consumers deserve such protection. Everyone knows that going alone to court is slow, costly and uncertain,” said French MP Geoffrey Didier, who also noted that collective action would be particularly handy for consumers in the current climate, especially as many European consumers have had to cancel their trips due to the global pandemic and ‘many never got reimbursed’.
Impact on the wider insurance industry
Elsewhere, business interruption claims have been making the headlines across the world, with ongoing lawsuits over insurers refusing to payout to businesses that were forced to shut due to coronavirus restrictions. What would happen were many of these consumers in the EU to band together against insurance firms that had refused to pay out?
Insurers, whatever their market, should be mindful of clear communication with policyholders to ensure that consumers are educated in what is and isn’t covered by their insurance offering.