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28 September 2020
Travel is the insurance line suffering most from the COVID-19 pandemic, according to the annual Radar report from actuaries Taylor Fry.
It says many insurers have stopped issuing near-term travel policies due to government restrictions, and premium volume descended into negative territory in the June quarter as refunds for unused travel policies were provided.
Radar contributor and Taylor Fry principal Win-Li Toh says the sector can recover, although it is unclear when that recovery will start.
“There is uncertainty around when borders might reopen and whether people actually want to travel again when borders reopen,” she told insuranceNEWS.com.au.
“It could be that once we get out of a pandemic world, people won’t just jump on a plane and fly here and there for no good reason.
“They might plan trips that are longer and more thought-through. Instead of going to Italy for a week you might think, ‘I’ll just go once every three years and I’ll go for three months’.
“Trips could be fewer but longer and more considered, and premiums could recover.”
The report, which analyses the impact of COVID class by class, warns that while travel is hardest hit, all insurance lines are likely to suffer to some degree.
Taylor Fry Principal Kevin Gomes says while travel insurance has been hit particularly hard, “in time, most lines of business are likely to experience adverse effects, as poor economic conditions and increasing community hardship constrain premium increases and apply ongoing pressures on claims”.
Click here for the full report.