According to data and analytics company GlobalData, an increasing number of re/insurers are reincorporating COVID-19-related repatriation and medical expenses as well as cancellation coverage.
Big names such as Blue Insurance, Allianz, Caster, and Staysure have opted to reintroduce coverage despite the associated risk of these claims in the travel insurance market.
This could cause payouts for medical claims and cancellations to reach record-breaking levels, but analysts at GlobalData believe it could be a good move in the long term.
GlobalData’s 2019 UK Insurance Consumer Survey found that the most common reason for claiming on travel insurance last year was medical claims,
Around 31% of respondents cited this reason, while cancellations were the second highest at 29%.
These make up a large part of the cost of claims for the travel insurance market, having generally increased over recent years and reached a record high in 2018.
In 2018, medical claims and cancellations under travel policies collectively cost insurers £399 million, although it decreased slightly to £377 million in 2019.
But this year, the Association of British Insurers (ABI) estimates that travel insurers have paid at least £275 million in COVID-19-related claims for the first quarter alone.
GlobalData noted that the revamp of products comes after a temporary pause on sales of new travel insurance policies implemented by insurers between April and July 2020.
“If more insurers begin to include COVID-19-related medical and cancellation claims as part of their standalone insurance products, the travel insurance claims market could hit record levels,” said Jazmin Chong, Insurance Analyst at GlobalData.
“However, despite the potential risks associated with higher claims, the integration of these offerings during unprecedented times is a good move by travel insurers to gain customers’ trust and increase their market shares in the longer term.”
