Travel insurers need to win back travellers’ trust for better market penetration

Travel insurance comparison site Medical Travel Compared analysed the CAA’s July, August and September International Air Passenger Traffic data and found that some 1,914,550 British travellers may have travelled abroad uninsured this peak holiday season.

It also seemed that a considerable number of these uninsured British travellers were heading to European destinations that were on or added to the government’s quarantine list, including Spain, the Balearic Islands, Portugal, Greek Islands, Canary Islands, The Netherlands, France, Hungary, Switzerland, Malta and Iceland. Indeed, Medical Travel Compared’s analysis revealed that:

• Spain and the Balearic Islands attracted 721,598 holidaymakers in August and September 2020, despite the country coming off the Foreign Commonwealth & Development Office (FCDO) list at the end of July
• Portugal attracted 125,238 air passengers in July and September when the destination was off the advised FCDO travel list
• The Canary Islands attracted 139,462 travellers this summer despite only being placed on the quarantine-free travel list on 25 October – 69,585 of those visited Tenerife

“Discovering that nearly two million travellers may have travelled uninsured this July, August and September is very worrying,” said Tommy Lloyd, MD of Medical Travel Compared. “Travel insurance is an essential element of taking a holiday, especially now when the whole world is experiencing the effects of the coronavirus pandemic.”

Lack of communication between public and private left many uninsured

So why did so many British travellers put themselves at a disadvantage by foregoing travel insurance during the height of summer and the coronavirus pandemic?

Well, as Lloyd notes, much of the Covid-19-cover that travel insurers are now offering was not available in the early summer period, and government decisions around travel corridors were being made with short notice and changing frequently.

“This meant that the insurance industry, like many other businesses, were being asked to react to huge changes with little notice, so many could not provide cover in time for holidaymakers’ trips,” said Lloyd.

Therefore, during the European summer holiday season, travellers were placed in a difficult position; asked to decide between taking a holiday without insurance, postpone their trip or ask for a refund – and clearly many chose the former.

Insurers need to prioritise transparency and customer education

It would be interesting to see how travel insurance penetration among the same demographic has now changed. Are more travellers now purchasing travel insurance, especially as many insurers are now offering products that cover travelling against FCO advice and Covid-19 related medical issues and trip interruptions? Or will unclear policy wording and Covid-exclusions that were in place over the busy summer period further deter travellers from engaging with travel insurance?

Data from the UK Financial Ombudsman Service (FOS) reveals that there has been a rise in the number of travel insurance claims complaints lodged to the FOS between July and September this year – many of the complaints over rejected Covid-19-related travel claims due to Covid exclusions that were written into plans.

There is definitely a consumer shift towards understanding the importance of travel insurance, brought about by the global pandemic. But transparency and winning back customers is something that travel insurers now need to get right if they hope to see larger market penetration.