Biresh Giri, Appointed Actuary & CRO, Acko General Insurance
The COVID-19 pandemic has paused people’s journeys. With measures such as Lockdown, Social Distancing, and Quarantine in place, people are finding it difficult to travel even to their office, leave alone embark on a trip to a foreign location. Global travel has reduced to a great extent. As a result, travel insurance has also been on the decline.
From residential co-operative housing societies to nations, small and large organisations have issued advisories – most of which restrict travel. With no signs of a large-scale and affordable cure for the virus, how will the ongoing pandemic affect travel insurance? Read ahead to know potential answers.
Travel Insurance in 2020
Earlier, travel insurance was usually reserved for specific international trips. In 2020, travel insurance begins the moment you set your foot inside a cab that takes you to the airport. It insures against unfortunate events such as missed flights and baggage loss. Such policies also cover instances ranging from hospitalisation in a foreign land to emergency evacuation to the home country.
In the recent past, travel insurance has received a boost due to InsurTech. However, the industry’s progress has been halted by COVID-19.
Also Read: Health Insurance Fundamentals: Things to Consider While Buying A Policy
Current Impact
In case you are wondering whether your recently cancelled trip’s expenses will be reimbursed by the insurance company or not, the answer depends upon the type of travel policy, the insurance company, and the policy’s inception date.
Some airlines have offered their ticket holders the option to reschedule their journey. Similar provisions are offered by travel insurance companies as well. There is also the option to cancel the travel policy – some insurers are doing it for free while some are charging a cancellation fee.
For those travellers who are stuck abroad (for example, students), can consider extending their travel insurance policies. However, not all insurers might offer coverage against COVID-19. Some might cover it, but with conditions, making it crucial to thoroughly go through the policy’s inclusions and exclusions.
The situation is being constantly analysed and measures are undertaken accordingly. Staying updated with the latest news from authentic sources will be helpful to understand the prevailing approach.
Future Impact
For the industry, the equation is straightforward: less travel = less travel insurance. With COVID-19 being a known risk, the policies might undergo several changes.
Insurance companies might look at drafting policies with more limitations related to similar events. To cover a pandemic, one may have to buy a separate rider (Add-on cover) along with the policy. Just as insurance is mandatory for Schengen Visa, similar compulsions can come in place for other countries. People above a certain age might be charged a higher premium.
Alos Read: Should you get yourself a COVID-19 insurance cover?
Corporate travel can take a hit with companies preferring online communication as compared to flying their employees to different continents. A similar decline in international conferences is also probable. Those who choose to travel might opt for individual insurance over a group policy for enhanced coverage.
The general population will take time to resume globetrotting. When it happens, important and expensive trips, especially those planned months in advance, might not go uninsured due to the fear of uncertain instances such as the ongoing pandemic.
Read the Fine Print
Travelling in the post-coronavirus world will bring its share of challenges. Travel insurance will also undergo necessary evolutionary alterations. Therefore, you as a traveller, must understand the risks posed by a changing world and take adequate measures to insure your trip. The key to doing so is evaluating different types of risks and making an informed decision by reading the fine print of the travel insurance policy.
If you feel certain points in the terms and conditions of the policy seem ambiguous, get full clarity from the insurer before buying the plan. Travel only if necessary and do not forget to insure your trip.
Views expressed in this article are the personal opinion of Biresh Giri, Appointed Actuary & CRO, Acko General Insurance.
