As hundreds of passengers enjoy international flights today for the first time since the start of the pandemic, travel insurance will need to be more flexible and offer clear and transparent coverage that minimises misunderstandings, Gallagher Bassett says.

Insurance will need to adjust to meet consumer expectations and explain easily what the customer is protected for, the claims management company says.

The first travel “bubble” between Australia and New Zealand opened this morning, allowing citizens international travel without requiring hotel quarantine when they return home.

“As we begin to see borders open and both domestic and international travel become accessible again, the demand for travel insurance will certainly ramp up,” Gallagher Bassett Partnership Manager John White says.

“This will mean more people in the air, away from their homes, who need reassurance and protection from their insurer.

"We know there are additional risks of travel in a post- COVID world, and policyholders will need to clearly understand how the policy will respond with COVID-related scenarios”.

Gallagher Bassett reveals it maintained a “core capability” of skilled travel insurance claims managers and worked to adapt to the changing needs of clients. With regulatory changes on the horizon, 2021 will be another challenging year for insurers, Mr White says.

“This ability to adapt and scale rapidly will be critical for insurers as overseas travel activity increases,” he says.

Jason Allison, Gallagher Bassett’s Senior Business Development Manager, says it is important for brokers to have exhaustive conversations with their clients about business travel and to consider how to best support clients to make a well-thought decision on the necessity of business travel.

“They should be having clear, open conversations with their clients around their internal business travel processes, requirements and adaptability,” Mr Allison says.

“Intermediaries need to ensure their clients understand what they’re covered for and have thoroughly worked through the myriad of challenges that may impact business travel and how they would be protected by their policy.

“As we start to explore the New Zealand travel bubble, brokers should be ensuring their clients understand how these additional risks may or may not be covered.”

Brokers will also need to consider that travel wordings may only cover claimants for additional and/or curtailment costs even in scenarios that could not have been reasonably foreseen.

In the current environment, insurers may deem that COVID-related lockdowns would not be considered unforeseen. Additional costs incurred due to this will be out of pocket expenses for the insured, he says.

Last month, the Insurance Council of New Zealand CEO Tim Grafton said border closures imposed by a government are not covered by any insurer.

"It is simply not possible to develop a product that accounts for the uncertainty and the level of risk this presents,” Mr Grafton said. “Insurers and customers need certainty of the exact dates and times borders open or close so that they know when cover is available and when it is not.”

At present, policies won’t cover cancellations to travel caused by government-imposed lockdown, costs if the government imposes a blanket quarantine, travel delay caused by COVID, border closures due to COVID and travel to any other countries where there is still a ‘do not travel’ alert in place.

Mr Grafton said the sector had responded to the “significant uncertainty and limitations” COVID-19 presents, introducing tailored policies that cover a range of COVID-19 related claims such as cancellation costs if you contract COVID-19, costs to return home if a relative gets sick with COVID-19 or costs if you have to quarantine while overseas.

Mr Allison says insurance brokers need to be “ahead of the game” when it comes to border closures, travel restrictions and regional COVID responses to ensure they can notify clients of risks early on before they become an issue.

“They need to have a clear understanding of each nation and state’s hotspot or travel restriction system, as well as stay abreast of COVID alerts in relevant regions for their clients,” Mr Allison says.

Corporate insureds will demand flexibility from their broker as they begin to navigate a world they “no longer have as much control over”.

“The risks have now changed from an employee or insured missing their flight due to a delayed meeting or traffic to employees being caught in mandated hotel quarantine – or worse, unwell with COVID-19 due to travelling for work,” he says.

“You will maintain and retain their business by demonstrating a thorough understanding of their organisation, their unique risks and what their insureds require when it comes to business travel.”