In bad news for the Australian travel insurance industry – not least from a PR perspective – travel insurance has been found to be one of the most complained about financial products. As a result of this, the Australian Securities and Investments Commission (ASIC) is placing the sector under heavy scrutiny, with plans unveiled to put the industry’s claims handling practices and the issues of fine print under the microscope.
Michael Saadat, Executive Director of financial services for the corporate regulator, said that travel insurance policy wording was a frequent cause of dispute and often made the claims process difficult. It has also been highlighted that exclusions related to medical conditions are high on the list of reasons for complaints, with travellers either confused or ignorant about what they do and do not need to declare in order for their coverage to remain validate in the event that a claim has to be made.
A recent royal commission in Australia recommended that the country’s insurance industry brace itself for regulatory changes, after a number of major insurers were apparently found to have unfairly declined claims by using outdated definitions and other underhand strategies. While these were in the life and general insurance arena, the enhanced powers that the ASIC will gain – such as closely scrutinising the claims handling process – will stretch to travel insurance as well. Saadat said that the introduction of unfair contract laws to insurance will hopefully address some of the issues that have cropped up with regards to travel insurance.
While unscrupulous practices in any segment of insurance must of course be brought to light, decried and punished, it is often difficult to know how much of consumer ignorance is due to failings on the part of the travel insurance industry, and how much is down to a lack of care on the part of the travelling public. Travel insurance is, after all, a grudge purchase.
Perhaps the best route to a more equitable relationship is a combination of regulatory scrutiny and enhanced efforts on the part of the industry to educate consumers about the importance of the product that they provide. The Smartraveller resource provided by the Australian Department of Foreign Affairs and Trade is a good start – hopefully more efforts can be made in this area, so that eventually travel insurance slides far down the ‘most complained about’ rankings …