Still a bit up in the air Adaptability is key as travel insurers take off into an uneasy post-pandemic world By Bernice Han
T
ravel insurance providers have a Herculean task before them: rebuilding their businesses after a COVID-induced nightmare sparked by the Federal Government’s ban on residents leaving the country. Sales cratered overnight in March last year when Canberra activated its “do not travel” global advisory in response to the pandemic. The advisory was removed on November 1 this year, the only requirement being that Australian citizens and residents must be fully vaccinated before they embark on their journeys. The trickle of sales to those who applied and received government permission to leave during the ban was barely enough to blunt the financial blow from the collapse of the leisure and corporate travel market. Before COVID struck Cover-More earned some $450 million in annual revenues from its 45% share of the share of the Australian travel insurance market. Around 5% of it came from trans-Tasman and domestic business. Outgoing Chief Executive Asia Pacific Judith Crompton told a Standing Committee on Economics hearing in June that after the ban came into force the Zurich-owned business saw its revenue nosedive to just $4 million a month, made up mostly of domestic and trans-Tasman sales. “That is now flipped to the other way around,” she said of the pandemic’s impact on the business, which derives 60% of sales from retail demand. The task of flipping the travel insurance industry back in the right direction – which was worth in excess of $1 billion until COVID came – is now underway, as departure gates at airports around the country start to gradually fill up again after some 18 months of near-total emptiness. The travel insurance sector has mostly adjusted swiftly, adapting its offerings to accommodate COVID-related cover such as medical assistance for
36 insuranceNEWS
December 2021/January 2022
policyholders who catch the virus while travelling. The revamps reflect the changed risk landscape in which there is a general acceptance that the virus and its variants may never be eradicated. However, the emergence of Omicron as Insurance News magazine went to press shows just how volatile it remains for the industry even as it gets used to COVID being a constant, lurking threat. And borders and travel bans enacted in response to significant health or safety risks remain a no-go zone for the industry, the Insurance Council of Australia says. A spokesman tells Insurance News that travel insurers have generally determined these risks are too great to underwrite. Earlier this year Allianz Partners Australia, a major player in the travel insurance sector, launched a new and simplified policy which has been adapted for travel in a COVID world. “Travel has changed dramatically since COVID-19 became a worldwide pandemic,” Chief Executive Chris McHugh tells Insurance News. The business continues to include a general exclusion against epidemics and pandemics, but if an insured is diagnosed with COVID before or during the trip some benefits may apply, subject to terms and conditions. If a traveller contracts the virus before the trip and is unable to travel, Allianz currently includes cover for cancellation of unused travel and accommodation arrangements that cannot be otherwise refunded or re-scheduled. In the event that a policyholder contracts the virus during the trip, medical assistance is available. Should COVID border closures, or mandatory quarantine, shorten or cause a cancellation of travel plans, eligible customers may also be entitled to a partial or full premium refund. But expenses incurred as a result of a border closure
