Third of New Zealand travel insurance claims are for Covid-19

The Omicron variant has caused travellers to cancel trips and delay their travel plans to see friends and family, resulting in a steady flow of Covid-19 claims.

Jo McCauley, CEO of Southern Cross Travel Insurance, disclosed that since the beginning of February 2022, Covid-19 claims have made up 32 per cent of the total claims received across its TravelCare (international) and Domestic travel insurance products in New Zealand. The average amount paid per claim is sitting at NZD$1,943. Interestingly, the average claim paid for domestic travel sits at $2,164 while international claims average $1,884.

The majority of Covid-19 claims received by Southern Cross were for travel cancellation and interruptions that occurred when customers contracted Covid-19 while on their holiday.

“We launched Covid cover in August 2021 because we knew this was important for customers, especially in this new environment where peace of mind is paramount. Our recent Future of Travel research shows nearly three quarters (72 per cent) of New Zealand travellers now rank a level of Covid-19 cover in their top three most important features of travel insurance, and we’re pleased to be able to offer a good value policy which delivers support when our customers need it.

“It’s fair to say the combination of the opening of the borders coupled with the Omicron variant has presented a substantial operational challenge to our business of late. Our sales and service and claims teams have been managing a significant number of enquiries from customers who are naturally more concerned about how Covid could impact their future travel plans.”

Destinations Australia and UK see most Covid claims

Southern Cross has also revealed the top three destinations which have experienced the largest number of Covid-19 related claims from Southern Cross customers. Taking out the number one spot is Australia, followed by the UK, with the Cook Islands coming in third.

McCauley said, although customer claims are being accepted by Southern Cross, some are declined. It always pays to check the terms and conditions of any policy. The most common reasons are:

• Being diagnosed with Covid-19 while travelling to a destination the Ministry of Foreign Affairs and Trade (MFAT) has classified as a level 3 or 4 travel advisory due to the risks of Covid-19
• The insured customer wasn’t diagnosed with Covid-19 themselves and was just a close or household contact which is not covered under the policy
• The insured party decided to cut short their journey after catching Covid-19 even though the remainder of the journey was not affected by Covid-19. It’s important to remember Covid-19 cover only covers you for travel changes and cancellations caused as a direct result of contracting Covid-19.

Despite it being an incredibly challenging time for the travel industry, McCauley acknowledged there have been some positives to emerge from the pandemic. “We’re certainly starting to see our customers engage a lot more with their travel insurance policy.”