After a year of pandemic-related challenges, travel insurance has become a common topic of conversation in the travel community, as vacationers, business travelers and travel advisors search for the best way to protect their purchases. But what’s next for the industry as we get closer to the light at the end of the tunnel?
“In 2020, we protected the client's investment, but in 2021, we aim to protect the client,” said Marisa DeSalvio, founder of DeSalvio Travel, an independent affiliate of Brownell Travel in Washington, D.C. “It's still possible for our clients to contract COVID-19 if they haven't been vaccinated and it’s still possible for them to have to quarantine for 14 days if they test positive in a foreign country. Many insurance policies have adapted to this need by offering medical evacuation or coverage for the 14-day quarantine, and this has been the new trend for insurance purchases.”
Changes to Travel Insurance Since 2020
To make it easier for travel advisors to access travel insurance training and resources, the US Travel Insurance Association recently launched the UStiA Travel Advisor Registry, which helps advisors comply with travel insurance licensing regulations passed by the National Association of Insurance Commissioners and the National Council of Insurance Legislators. The regulations, which are in effect in most U.S. states, dictate that travel advisors must be trained and register with travel insurance providers whose product they wish to sell — and with the new registry, they can more easily sign up with multiple providers.
Even with training, the ever-changing nature of the insurance industry’s response to the pandemic has complicated the process of choosing the right policy, DeSalvio says.
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“Shopping for travel insurance is even more complicated, and since policies have changed so quickly, advisors need to triple check that every specific worst-case scenario is still covered by the providers prior to purchasing,” she said. “The biggest insurance mistake advisors can make is assuming that policies still provide the same coverage as 2020.”
Indeed, insurance companies continue to hone their product to meet changing demand. In 2020, Seven Corners introduced a new benefit to its Liaison Travel Plus policy that covers up to $100,000 in medical expenses for COVID-19 cases.
It's still possible for our clients to contract COVID-19 if they haven't been vaccinated and it’s still possible for them to have to quarantine for 14 days if they test positive in a foreign country. Many insurance policies have adapted to this need by offering medical evacuation or coverage for the 14-day quarantine, and this has been the new trend for insurance purchases.
And this week, Allianz Partners debuted what it calls the Epidemic Coverage Endorsement, a series of enhancements to its policies that add epidemic-related illness as a covered reason to cancel or interrupt a trip, or to seek reimbursement for medical care. The policies also now allow insured travelers to cancel or interrupt their trip if they (or their traveling companion) have been individually ordered to quarantine.
Jeremy Murchland, president of Seven Corners, agreed about the need to stay on top of the changes.
“Customers need to be better educated on what travel insurance is, why they need it and what coverage is appropriate for their situation,” he said.
Cancel for Any Reason (CFAR) Only Goes So Far
With travelers more concerned than ever about trip cancellations and changes, the popularity of cancel-for-any-reason (CFAR) insurance continues.
“The important thing to know and understand about CFAR is that it does increase the cost of your travel insurance, but it also provides the greatest amount of flexibility when it comes to your trip,” Murchland said.
Still, travelers — and travel advisors — need to be sure they’re getting the coverage they need with a CFAR policy, according to Katie Genter, senior reporter at The Points Guy, a travel advice website.
It's important to read the fine print and determine just how much you'll get back if you cancel.
“Travelers often assume ‘cancel-for-any-reason’ policies allow you to cancel for any reason and get a full refund,” she said. “But this usually isn't the case. As such, it's important to read the fine print and determine just how much you'll get back if you cancel.”
Jason Schreier, CEO of April Travel Protection, which introduced a Pandemic Plus Plan last year, said he’s witnessed “unprecedented” demand for CFAR policies — and he also praises the insurance industry as a whole for developing new products in response to the pandemic.
“After a full year, most insurance companies — similar to travel suppliers — are remaining flexible by offering insurance vouchers and, in some cases, prorated or full premium refunds past the free look period, which is usually 10 to 14 days from purchase, if a client has their trip cancelled by their supplier and fully refunded,” he said.
Top Travel Insurance Trends for 2021
Genter identifies two trends that affect how travel insurance is bought and sold in 2021.
“First, as more destinations open for tourism, many destinations that previously didn't require travel insurance currently do,” she said. “I expect as additional destinations open up to tourism, we'll see more countries require travel insurance for entry.”
“Second, the rules and regulations continue to change frequently for some destinations,” she added. “In particular, quarantine and testing requirements are increasing in some regions. And some destinations have implemented different entry, testing and quarantine requirements for vaccinated travelers. As such, travelers must increasingly ensure their travel insurance will provide coverage if a trip becomes unfeasible or undesirable due to new requirements at a transit point or destination.”
Travelers and travel advisors should also be careful about choosing a travel insurance company, according to John Rose, chief risk and security officer at Altour, a business travel management company that’s part of Internova Travel Group.
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“Right now, a lot of consumers are rightfully concerned [about] the financial stability of the particular vendor they’re going with,” he said. “If they’re using a smaller tour operator, hotel chain or resort, they might not know about their financial stability — and buying insurance doesn’t protect them if there’s financial default.”
Rose also noted the influx of new companies offering travel insurance. “People need to be wary of new providers,” he said. “I’m not saying those companies are bad, but every time you have an event like this historically, you have actors pop up with coverage, and you need to do due diligence before you buy from a company that you don’t know.”
As more destinations open for tourism, many destinations that previously didn't require travel insurance currently do.
Nevertheless, the arrival of new suppliers may actually be a good thing, Rose added.
“The flip side is that there may be an opportunity for someone to come in with a disruptive [product],” he said. “We’ve seen it in travel countless times — Uber, Airbnb, on and on. They disrupted the entire industry, but they disrupted it in a way that ultimately was good for the consumer. We could see that some of those new players may come out being fantastic. But it’s a little bit of ‘buyer beware’ for now.”
The Future of Travel Insurance, Post-Pandemic
Even after the COVID-19 pandemic is under control, the insurance industry is likely to maintain a similar approach as it develops new products and services, according to Genter.
“Before the pandemic, most travel insurance excluded disinclination to travel due to an epidemic or pandemic,” she said. “But I expect that many travel insurance policies will include an ‘unwillingness to travel due to an ongoing epidemic or pandemic’ as a covered reason in the post-pandemic world. Of course, insurance will likely only provide coverage if you booked the travel before the epidemic or pandemic began.”
One thing is certain: A lot of travelers will still want travel insurance in the post-pandemic world, according to Rose.
“The fear of something like this happening again will be in the back of everyone’s mind, maybe permanently,” he said. “It’s like the horrific events of 9/11. The chances of an event like that are extraordinarily low, but we still have TSA procedures that are not going to relax. It’s going to be the same with the pandemic and insurance. You’re still going to see take-up rates much higher than they were historically. Consumers realize they need this.”
The Details
US Travel Insurance Association
www.ustia.org
