Generation gap hits travelers on insurance
Ally Malpass thinks travel insurance is too expensive for a trip to Tasmania, but a flight cancellation leaves her stranded in Hobart. Photo: Oscar Colman
Flight cancellations, lost baggage, COVID-19, and a host of other travel disruptions are causing travel insurance claims to skyrocket, sending insurance premiums and costs overboard.
Australian travelers on the older and younger ends of the spectrum bear the brunt of this financial constraint.
Older Australians are now finding it difficult – or very expensive – to buy insurance, with already high premiums boosted.
And although preliminary data revealed younger Australians showed greater intention to buy travel insurance than before, factors such as rising inflation and more expensive policies proved to be a major deterrent.
For Vanessa Fielden, 55, who divides her time between Melbourne and Bali, finding insurance that includes unlimited medical and repatriation coverage is non-negotiable.
“My policy includes being flown to Singapore if necessary,” said the health practitioner, who takes a comprehensive policy for discounted rates through his auto insurance company.
However, Fielden still has concerns about the affordability of future coverage as COVID-19 continues to raise premiums. “After turning 60, I think we’ll have to see what happened in the world then, and at what cost.”
Ally Malpass, 30, did not take out travel insurance for a recent trip to Tasmania with her boyfriend. The move cost them nearly $1000 after a series of flight cancellations left them stranded in Hobart.
“I’ve looked into domestic travel insurance and it’s very expensive for minimal coverage. The excess for a car rental alone is over $1000,” said the Sydney-based artistic director. “I ended up not doing it, which I regret,” he said.
Malpass said that travel insurance was rarely a factor in his travel planning before the pandemic, but certainly is now.
“If I had traveled anywhere overseas, especially America, the fear of not being able to return home if I caught COVID, or of having to pay large sums of money due to border closures – I wouldn’t even consider not getting one right now,” Malpass said.
Research by insurance provider Cover-More found changing attitudes towards travel insurance among younger consumers, with survey data showing 84 per cent of Australians under 30 years of age intending to purchase travel insurance.
“Younger customers appear to be taking out insurance for the first time because of the extra reassurance it provides them with the risk of COVID-19 impacting travel plans,” said Todd Nelson, managing director of Cover-More Australia.
Nelson also noted a sizeable spike in travel insurance claims as international travel generates bumpy returns. “The current claims volume is even higher than the peaks we experienced before COVID,” he said.
Canstar financial expert Steve Mickenbecker said: “COVID risks significantly increase the likelihood and size of claims against travel insurance. This should result in higher premiums.”
Mickenbecker also reminded consumers not to be tempted by cheaper policies amid soaring policy prices.
“Some policies exclude claims arising from COVID or the pandemic in general, and as a result may be able to quote lower premiums, so it’s important that travelers don’t choose exclusively based on price, but investigate the extent and level of coverage,” he said. “Very low premiums can trigger alarm bells so essential protection is not included.”
Providers have also introduced policies with special COVID overloads on top of regular overloads, Mickenbecker warns. “This means that out of pocket costs will increase when there are claims of COVID-19 events,” he said.
Preferred travel expert Jodi Bird says travel insurance prices have increased by about 10 percent on average, although this can vary widely.
“People with certain medical conditions may find prices rising sharply,” says Bird.
Policies covering two weeks of travel in Europe with unlimited cancellation coverage start at around $500 for travelers in their 30s, and jump to nearly $1000 for those over 70, with no pre-existing medical conditions.
Mickenbecker said older Australians would find protection invaluable during the COVID era.
“The susceptibility of older age groups to serious events such as transmission of COVID increases the risk that intensive medical care may be required. This means higher premiums,” Mickenbecker said.
Cruise ships are also popular with this group, and carry a further premium payload due to the high risk of virus transmission, Mickenbecker said.
“Unfortunately for the elderly, the premium burden can increase. However, comprehensive travel insurance remains a must.”
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