With foreign travel from the UK still uncertain, Liz Booth examines the effect on the travel insurance market
Despite the UK government announcing a three-tier system for holiday destinations and Covid-19 restrictions on return, it seems the UK public remains unsure whether or not to make a booking.
In fact, online travel agent On the Beach says consumers are so unsure that it has decided: “We are not selling holidays for June, July and August. “Plenty of other travel companies will be more than happy to take your money, even though they are not sure yet what the additional costs or inconvenience might be. We’re not.
“Basically, there is too much unknown for us to take new bookings with the confidence that they will go ahead, or for us to know the potential inconvenience or extra costs that customers might face.”
Meanwhile, holiday company TUI Group is hoping for a strong 2021 summer season and will operate at 75% of pre-pandemic capacity, with increasing levels of vaccinations set to fuel last-minute bookings.
It reports that new bookings have doubled since April, with customers from Germany and Belgium driving demand for holidays after winter lockdowns and the group expects UK bookings to catch up as more destinations are opened in the next few weeks.
However, research from travel insurer Holidaysafe suggests most holidaymakers plan to wait and see how international travel will work in the next few months before booking a trip.
The research, collected the same day as the government unveiled its green list of ‘safe’ countries for travel, found that although keen on a holiday, almost a third of UK travellers are still uncertain about booking one right now.
Respondents’ main reasons for delaying their next trip were:
- Waiting for the EU to get vaccinations stabilised.
- Waiting until they had personally received both doses of the Covid-19 vaccine.
- Not wanting to face isolating on their return.
The results come as no surprise, given the last-minute removal of countries on the travel corridor list last year. This led to struggles for some holidaymakers when trying to recover their money from airlines and independent accommodation providers.
Sarah Page, brand manager at Holidaysafe, says: “Our research clearly highlights that Brits are desperate to enjoy a holiday abroad, but are still a little apprehensive when it comes to booking.”
Meanwhile, Smart Money People, the customer review website and insight business for financial services, asked more than 800 people for their views on travel insurance policies during lockdown and beyond.
Asked if travel insurers should offer refunds or reduced rates for policies that people have been unable to benefit from because of travel restrictions, two thirds (66.3%) of respondents agreed or strongly agreed (32.3% and 34.1% respectively). Some 13% disagreed or strongly disagreed with the statement, while slightly more than a fifth had no views on the matter.
38% of people admitted to having travelled abroad without travel insurance at some point
Jacqueline Dewey, CEO of Smart Money People, says: “As Britons contemplate another uncertain summer of travel restrictions, vaccine passports and other impediments to their holiday plans, the way we feel about insurance has struck a chord with our reviewers.
“Full or partial refunds of travel insurance policies that could not be used were called for, as insurers with no exposure to risk took premiums from people whose holidays were cancelled.”
The survey has highlighted the reputational issue that insurers are facing – not paying travel claims has caused a real dent in the reputation of insurance across the board.
However, researchers, Economic Observatory, last year pointed to some positives. It suggested that the pandemic has forced insurers to truly innovate, despite the sector’s tendency to lag behind others.
One example of that in the travel sector is the recent announcement from Collinson, which is renewing its partnership with easyJet until at least April 2024, providing travellers with a range of relevant and dynamic insurance options, including dedicated Covid-19 cover for all domestic travel.
The enhanced product, available to include during easyJet’s booking process, will mean customers diagnosed with Covid-19 ahead of a trip are covered for any necessary refunds or rearrangements, as well as being covered for any required medical care if diagnosed with the virus while abroad. In the event customers are unable to return home due to being diagnosed with Covid-19, the policy will also cover them for additional accommodation as well as the cost of returning them home safely.
Collinson has launched a number of new products and propositions designed to get the world travelling safely again in the wake of the pandemic.
“We know Brits are chomping at the bit to get out and see the world again when they can,” says Greg Lawson, head of travel insurance at Collinson. “However, some passengers are understandably wary of what will happen to them or their bookings if they catch Covid just before or during their trip. We want to give people peace of mind to encourage them to plan those holidays they have been dreaming of for over a year now.”
Within the partnership, Collinson will underwrite and service the full range of dynamic and tailored products. These products are filtered to be relevant to the booking profile, with business travel routes, for example, being offered a gadget insurance upgrade, while a ski resort customer would be offered a winter sport upgrade.
Sophie Dekkers, EasyJet’s UK chief commercial officer, adds: “The need for travel insurance is greater than ever before, so we know it will help bolster consumer confidence to book and travel, giving holidaymakers a much-needed reassurance for future bookings and possible Covid-19-related disruptions.”
The Association of British Insurers, meanwhile, has summed up the challenge. “The travel environment has changed but the core purpose of travel insurance – to cover the sometimes eye-wateringly high costs of needing emergency overseas medical treatment abroad – has not,” it stresses.
“While the ability to travel was limited in 2020, we still saw some shockingly high medical bills as a result of emergency medical treatment needed overseas. In one case last year, the cost of one month’s private medical treatment in Spain following a fall, and emergency medical repatriation back to the UK, was £124,000.
“In another case, treating and returning a traveller who contracted Covid-19 while in Cyprus cost £70,000. Both these medical bills were paid for by travel insurers, yet amazingly, pre-pandemic research by ABTA in 2019 revealed that a worrying 38% of people admitted to having travelled abroad without travel insurance at some point. That is not a risk worth taking, especially as travel insurance can cost less than a family-holiday meal out.”
Liz Booth is contributing editor of The Journal