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When Covid-19 struck early last year and most travel stopped around the world, potential vacationers rushed to get reimbursements from hotels, airlines, cruise lines and other travel providers – or to file travel insurance claims for canceled trips.
They often hit a wall on both fronts. Suppliers have struggled, or sometimes stuck, with refunds, making those without insurance wish they had purchased it. During this time, “policyholders” often discovered that the plans they had purchased did not cover travel costs or medical costs related to Covid.
“People were trying to get their money back, trying to navigate between credits and refunds, and filing travel insurance claims,” said James Ferrara, co-founder and president of the Delray Beach, Florida-based InteleTravel network. which has some 60,000 households. based travel counselors. “They were also considering travel insurance for their next [trip] and making sure the insurance would cover another occurrence of a pandemic, because all of this surprised a lot of people, including the insurance industry. “
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In the wake of these epic “burns”, many Americans hitting the road again now that pandemic-era restrictions are lifted are ensuring their trips – and their health – as they plan their trip. They do this both to avoid future problems and, in some cases, because they have to. More than two dozen countries, for example, require visitors to have medical and sometimes travel coverage that includes Covid-related incidents.
“There was a good grip before [Covid], but not anymore, “said Megan Moncrief, chief marketing officer and data specialist at travel insurance comparison site Squaremouth.com.” It makes sense when you think about how important overseas care can be. expensive.”
Squaremouth, based in St. Petersburg, Florida, maintains an online list of around 26 countries that currently require visitors to have Covid-specific medical coverage. (U.S. health insurance plans generally do not cover overseas medical care.)
Additionally, to visit Dubai, for example, you need at least $ 100,000 in general emergency medical coverage and $ 50,000 for medical evacuation. And for travel to Antarctica, where various nations control different areas, tour operators often charge at least $ 100,000 in medical coverage and evacuation costs.
The amounts are justified. Jeremy Murchland, president of travel insurer Seven Corners, said his team regularly assist with evacuations and “we’ve had a few cases over the past year that have gone over six figures.”
It’s not just destinations and tour operators that require coverage. In the hard-hit cruise industry, Royal Caribbean Cruises has announced that unvaccinated passengers must purchase travel insurance, TBEN reported. “There is going to be a [push] travel suppliers, “Moncrief said.” But we have seen [sales] almost 100% of consumers who are just a little shocked and want to know what their coverage options are. “
In June 2020, Indianapolis-based Seven Corners was among the first to offer Covid-specific medical coverage, under three plans for international travelers, students and frequent travelers. (The company, which sells both full travel insurance policies and medical-only coverage plans, has also introduced a new Claims Your Way service that matches customers with their own agent to facilitate the claims process.)
Last month, Squaremouth, for its part, saw travel insurance sales surpass those of June 2019, rising 14%. Compared to June 2020, when hardly anyone was traveling, sales jumped 466%. “There is definitely a big rebound going on, which in my opinion is great for the industry,” Moncrief said.
However, the customer demographics have changed. Baby boomers and older travelers – once the stalwarts of the industry – have not returned, she noted. “We are seeing a younger population, around 10 years younger than our historical average,” Moncrief said. “Right now we’re seeing people in their early 40s really driving travel insurance purchases.
Likewise, data from Seven Corners shows that the average age of a buyer of a travel protection plan is 43, while that of customers who buy a medical-only travel plan is a bit younger. at 39 years old. (In 2020, about 87% of all Seven Corners complaints received were solely for trip cancellation, the company said.)
“It’s really everyone who had some kind of cancellation [last year] … And now they’re looking for travel insurance, or they’re forced to buy it, ”Moncrief said, noting that at one point in the pandemic, travelers up to the age of 21 were Squaremouth’s biggest demographic customer. “It was crazy to see this change,” she said. “When have they bought travel insurance before? But they were the only ones traveling. “
At Seven Corners, policy sales are only about 10% lower than in 2019, although the latest industry forecasts predict that international travel in 2021 will only reach 40-50% of the figures released there. two years ago, according to Murchland. “What this tells us is that the ‘attachment rates’ are much higher,” he said. “More and more people are aware of travel insurance and its necessity.”
Health and safety are now top concerns for travelers of all ages, and even those on domestic trips, according to InteleTravel’s Ferrara. “If I have to travel now, what is the hotel, cruise line, or tour operator doing to protect me? ” he said. Travelers also wonder what is expected of them upon arrival, in terms of vaccine credentials and Covid testing requirements, and worry about costs and the possibility of filing claims if they have to cancel.
Standard and traditional travel insurance plans often required buyers themselves to contract Covid in order to obtain reimbursement for travel; sick family members, canceled flights, state-imposed quarantines, job losses, etc. were not eligible. Indeed, only 30% of the Covid-related claims Squaremouth saw were due to policyholders falling ill themselves; the remaining 70% was due to other factors, such as border closures.
Murchland at Seven Corners explained that a case of nerves is also not suitable for claims. “A lot of people had booked a trip for the end of last year and said ‘Hey I’m nervous I don’t want to travel and… I’m going to cancel my trip,’” he said. “But being nervous or being afraid to travel will generally not be a trigger covered in the basic insurance policy.”
Since insurers often have Byzantine rules about covering a canceled trip, Squaremouth is now seeing sales of canceled plans for some reason skyrocket. Sales are up 165% from 2019, Moncrief said. For its part, Seven Corners saw a 180% increase in the sale of these plans last year compared to 2019, and the trend continued into 2021. True to their name, these generally more expensive plans offer a no questions asked refund for cancellations. trips.
“We never recommended canceling for any reason prior to Covid due to the sharp increase in premiums,” she said, but people want it. “It’s like we’re coming out of [the pandemic] but even now… travelers are like “I don’t know what’s going to happen” and they buy a cancellation for some reason. “
Will demand fade over time, as the pandemic will hopefully recede into memory? Moncrief does not think so. “How are we going to react to the next pandemic?” she said. “No one knows the answers, and for that reason I think interest in travel insurance is going to stay high.”
Is peak interest guaranteed?
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These new travel supplier coverage requirements could also last, she said. “Cruise lines, tour operators and airlines can only maintain reimbursement for so long; they need another option.”
Murchland noted that before Covid, only about 30% of American travelers had purchased travel insurance – compared to 60% of people, for example, in Europe – but the severity of the pandemic had caused a change. “Because Covid has lasted so long, I think there is going to be power; to what extent time will tell,” he said. “I don’t think it’s something that’s going to go away as we approach next year.”
Ferrara at InteleTravel is less certain. “We Americans have short memories,” he said, noting that a first spike in Google searches for travel insurance at the start of Covid “fell through” in six to eight month. “Part of it is a defense mechanism that belongs to us as humans – we just don’t want to think about it.
“While I would like to say that there is going to be an increase in travel insurance purchases, I am not so sure.”