The COVID-19 pandemic has caused a substantial shift in travel insurance claims. While traditional claims for trip interruptions and medical issues continue, they occur less frequently than before. Instead, COVID-19-related claims, such as testing, treatment, and extended quarantine expenses, have gained prominence. The primary drivers of this change are global travel restrictions and heightened health risks brought about by the pandemic, alongside concerns about last-minute travel disruptions and the demand for more flexible insurance options.
Says Rakesh Goyal, Director of Probus Insurance Broker: "Before 2018, common travel insurance claims encompassed medical issues during trips, trip interruptions/cancellations, lost baggage, and travel delays. In 2018, many international travellers in India bought travel insurance. Post-2020, the COVID-19 pandemic triggered a surge in trip cancellation claims, medical evacuations, and new COVID-19-related claims such as testing and treatment costs. Total travel insurance payouts in 2020 rose by over 50 per cent, with certain COVID-19 medical claims. Additional concerns included higher travel costs, evolving travel plans, and a greater focus on flexible insurance coverage and cancellation options, prompting insurers to adapt policies accordingly."
Between 2018 and 2019, a substantial number of international travellers in India purchased travel insurance, primarily claiming for medical emergencies, trip interruptions, and lost baggage. However, in the post-pandemic period, COVID-19 wreaked havoc on travel plans, resulting in a substantial surge in trip cancellation claims and escalated medical evacuation claims for Indians stranded abroad. New claim categories emerged, covering COVID-19-related expenses, including testing, treatment, and extended quarantine abroad. Concerns shifted towards last-minute travel disruptions and more flexible insurance coverage and cancellation options. In summary, the nature and scale of claims transformed post-pandemic, necessitating insurers to adapt to these evolving risks.
"The travel insurance landscape has shifted dramatically over the years. More people are aware of travel insurance and purchase the policy before their travel plans, which has significantly increased post-pandemic. Looking specifically at the number of flight bookings is the biggest indicator of this, as most travel platforms offer travel insurance with flight booking. Today's travel insurance product offerings have been modified to focus on needs specific to travellers," says Gaurav Arora, chief of underwriting and claims property and casualty at ICICI Lombard.
Here are other ways the landscape of travel insurance claims has evolved since 2018. Let us find out:
Says Manas Kapoor, business head of travel insurance at Policybazaar.com: "More people are now making non-medical travel insurance claims, especially European travellers facing challenges at airports. In particular, claims related to delayed and lost checked-in baggage have significantly increased due to disruptions and chaos at numerous international airports."
The number of medical claims has dropped by almost 15 per cent when comparing pre-pandemic to post-pandemic periods. "Government-imposed travel restrictions have heightened awareness among travellers about the need for insurance covering trip cancellations and interruptions due to specific limitations. In response, insurers have adjusted their offerings to address these unique scenarios. Some Southeast Asian countries, including Thailand, Vietnam, and Indonesia, have made travel insurance mandatory. This change highlights the crucial role of insurance in protecting travellers and managing potential risks, especially in the context of evolving global travel dynamics," says Kapoor.
According to experts, a rising inclination towards automation is reshaping the claims processing arena. Insurance providers are embracing online claims filing systems, significantly boosting the efficiency of travellers' claims process. This automation not only simplifies the submission of claims but also offers a complete solution for tracking and managing claims from start to finish.
Destinations in the UK and other parts of Europe saw a notable rise in baggage loss incidents. Meanwhile, Southeast Asian countries experienced a substantial increase in traveller arrivals, leading to a surge in insurance claims for trip delays, baggage delay/loss, and missed connections.
Before the pandemic, travel insurance claims primarily revolved around more common issues such as trip cancellations, baggage loss, and medical emergencies. Post-pandemic, several notable trends emerged in travel insurance claims.
Pandemic-Related Claims: "Travel insurance claims began to include pandemic-related issues, such as trip cancellations due to COVID-19, Medical expenses related to the virus and quarantine costs. Some policies offered coverage for these situations under special circumstances," says Arora.
Policy Adjustments: Insurance providers updated their policies to adapt to the changing travel landscape, introducing new clauses related to the pandemic and including coverage for known or foreseeable events like the pandemic.
Increased Cancellation Claims: Travelers were more likely to cancel trips due to concerns about health and safety, which led to an increase in Trip cancellation claims.
Digital Transformation: The claims process became more digital, with online claim submissions, virtual inspections, and remote communication with claim adjusters becoming the norm.
Policy Flexibility: Insurance providers started offering more flexible policies with options for cancel-for-any-reason (CFAR) coverage to address travellers' uncertainty.
It's essential to check with specific insurance providers for the latest trends and travel insurance claims changes as the industry adapts to the post-pandemic environment.
Pandemic-Related Claims: The pandemic brought a significant shift, leading to a surge in claims related to trip cancellations and interruptions due to COVID-19. Travelers sought reimbursement for non-refundable expenses.
Medical and Quarantine Claims: With the increased focus on health and safety, there were more claims for medical expenses abroad and quarantine-related costs, such as extended accommodation and meals during isolation.
Flexible Policies: Travelers demanded more flexibility, leading to claims related to policies with cancel-for-any-reason (CFAR) coverage, allowing cancellations for various reasons.
Digital Claims Processing: The pandemic accelerated the adoption of digital claims processing, reducing in-person interactions and making it more convenient for travellers to file claims online.
Changing Travel Trends: Shifts in travel patterns, such as remote work and "workcations," contributed to different types of claims. Some travellers had to file claims for business equipment losses while working from destinations.
Extreme Weather Events: Climate change led to increased claims related to extreme weather events, including natural disasters disrupting travel plans, further increasing the demand for travel insurance.
Evolving Industry Practices: Insurance providers adapted their offerings and terms, leading to shifts in claim types and approval processes.
It's important to note that these changes are not exhaustive and may vary by region and insurance provider.
Let us discover how customer expectations regarding travel insurance claims changed and how insurance providers meet these evolving needs.
Increased risk awareness prompts customers to prioritise adaptable travel insurance. Travelers now seek pandemic-related protection, including health coverage and trip cancellation. They desire flexible policies, such as "cancel-for-any-reason," and efficient digital claims processing with real-time tracking. Responding to evolving expectations, insurers offer comprehensive coverage, adopt digital claims processing, and enhance support services. Coverage for pandemic-related risks, including trip interruptions and COVID-19 medical expenses, is now standard. Improved health and safety benefits cater to medical needs and emergencies. Customisable policies and guidance prevent over-insurance, ensuring customers are adequately protected.
Travel insurance now offers supplementary riders for unique situations. For instance, an adventure sports rider provides extra coverage for sports-related injuries. Likewise, travellers with pre-existing medical conditions can opt for PED cover, adding a layer of protection.
Utilising technology is crucial for streamlining travel insurance claims, enabling online submission through websites or mobile apps, simplifying the process, and minimising paperwork. Real-time travel assistance is provided for claim-related queries, and online tracking keeps travellers updated on claim status. Automation in the claims process enhances efficiency and reduces human error, resulting in quicker processing and expedited payouts. Some insurers have adopted AI and machine learning algorithms to assess claims swiftly by analysing documents and evidence. This modernisation enhances the travel insurance experience, making it more accessible, efficient, and transparent. Travellers can now navigate the claims process more easily, receiving faster resolutions and improving their overall experience with travel insurance.
Certain destinations, particularly those witnessing a surge in visitors, now mandate minimum travel coverage. This involves specific requirements for medical expenses and repatriation coverage. Travellers must verify that their insurance policies align with these requirements to secure entry into specific countries.
Pandemic-Specific Coverage: "Many insurance providers introduced pandemic-related coverage, including trip cancellation and interruption due to COVID-19, medical expenses for COVID-19 treatment, and quarantine-related expenses," says Arora.
Policy Adjustments: Insurers updated their policy terms and conditions to address pandemic-related claims. Some clarified coverage for pandemics, while others excluded coverage for known or foreseeable events like the pandemic.
Enhanced Communication: Insurers improved communication with policyholders, guiding coverage and claim processes related to the pandemic. This helped alleviate confusion and uncertainty.
Digital Claims Processing: "To reduce physical contact and streamline the claims process, many insurers implemented or enhanced digital claim submissions, document uploads, and virtual inspections," says Arora.
Transparency: Insurance providers became more transparent about the limitations and inclusions in their policies, ensuring that travellers clearly understood what was covered in a pandemic-related claim.
Customer Support: Insurers increased their customer support efforts to assist travellers with claim submissions and questions, recognising the need for additional support during the pandemic.
Flexibility: Some insurers introduced more flexible policies with features like cancel-for-any-reason (CFAR) coverage, allowing travellers to cancel their trips for various reasons, not limited to the pandemic.
Speedier Processing: In response to the increased volume of claims, insurers allocated more resources and worked additional shifts to expedite claims processing to provide quicker reimbursements to policyholders.
These adaptations aimed to address the unique challenges posed by the pandemic, providing more comprehensive coverage and improved support to travellers dealing with the impact of COVID-19 on their plans.