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24 March 2020
Australia’s $1.2 billion travel insurance industry is under pressure to refund premiums paid for cover that will go unused as a result of the shutdown on travel.
The coronavirus outbreak has decimated tourism globally, grounded most flights and resulted in government-mandated restrictions on movement. Many countries have banned arrivals from non-residents, forcing policyholders to abandon business and holiday plans.
Most travel policies have an exclusion for disruption caused by a pandemic. But commentators are calling for the industry to demonstrate goodwill by refunding travel insurance premiums now the travel isn’t happening on government advice. They say this would support customers and likely earn loyalty in the future.
Travel insurers such as Cover-More and TravelCard declined to comment on whether large-scale premium refunds could take place, but insuranceNEWS.com.au understands from industry sources that some insurers are seriously considering the issue.
“We are in the process of looking at our policies and coming up with a firm position on refunds and processing,” a TravelCard spokeswoman said.
Allianz has previously said it is considering its travel insurance options, while RACV has suspended sales of the product. Cover-More suspended its “Cancel For Any Reason” policy sales.
John Durie, a columnist at The Australian, said today some sections of the travel insurance industry are “providing a textbook lesson in why they should be avoided at all costs in the future”.
He criticises pandemic exclusions and the fact they are detailed within product disclosure statements.
Durie says while the government, regulators, banking and other sectors are “going out of their way to help those in difficulty,” the travel insurance industry “is seemingly not always reading from the same script”.
“There are other ways the insurance industry could help, like refunding travel insurance premiums now the travel isn’t happening on government advice.
“That means a loss of income for the travel sector but now is also a good time to show customer support to earn the business loyalty in the future.”
Most travel insurers only allow cancellation and a refund of premiums paid during a brief cooling-off window immediately after purchase, usually two weeks. However, changes such as altering travel dates can usually be made outside this window.