How can travel insurers help customers choose an appropriate policy?

Complaints relating to travel insurance at the Financial Ombudsman Service (FOS) have increased by 19% in the past year.

Many of these complaints are from customers unhappy and confused by the fact that their claim has been declined. Given the size of the travel insurance market, and the way that many customers approach buying travel insurance, this isn’t entirely a surprise. 

Travel insurance is often bought as an afterthought, after someone has paid for their holiday. This means that many customers go through the buying process in a bit of a hurry, wanting to get some kind of insurance to cover them in case something unexpected happens, but without the energy or inclination to do much research or read the details of what they’re buying. 

To make things more difficult, there is a huge range of travel insurance products to choose from. According to Fairer Finance data, there are over 600 travel insurance products currently being sold. Navigating this market can be overwhelming for customers, especially if they’re in a rush, unsure of what different policies do and don’t cover, or uncertain how much cover they need.

So what can providers do?

Pre-existing medical conditions 

To help customers understand what they are buying - and avoid any surprises if their claim is declined - travel insurance providers need to do what they can to draw customers’ attention to key information in their online quote and buy journeys.

According to All Clear, one in four people don’t declare all their medical conditions when buying travel insurance (All Clear). This leads to many claims being rejected, due to medical conditions not being fully disclosed. It also results in complaints, since some customers don’t feel these exclusions are made clear enough. 

Providers can do better when it comes to clearly explaining certain aspects of exclusions around pre-existing medical conditions. For example, it isn’t always clear that customers must disclose conditions they no longer have. It also isn’t always obvious that if there is a change in a customer’s health, they need to inform their insurer to be suitably covered.  

An example of best practice in this area is Admiral. In their quote and buy journey, customers are provided with an alert at the end of the process which explains in some detail that they must declare their pre-existing conditions and any changes in health to be covered when abroad. Admiral also requires that customers click to confirm that they fully understand this before continuing to purchase.

Cedartreeinsurance.com has added a video explaining what a pre-existing medical condition is before the customer has to make the declaration. This is an innovative way to convey information to customers.

Providing a link to the directory for pre-existing medical issues, as AllClear does (see below), also gives useful guidance for the customer. 

Natural disasters

Climate change has impacted the travel insurance market significantly. There are now higher risks when travelling - from volcanic eruptions and earthquakes, to wildfires and extreme heat waves.  

As a result, travel insurers are having to evolve, with more and more of them including natural disaster coverage as standard or as an add on to their products. Providers can do more, though, when it comes to explaining what is and isn’t included in their natural disaster cover. Typically, this section of the insurance covers relocation for the customer to continue with their holiday or repatriation home. Some providers now also include cover for when the customer needs to cancel prior to going on holiday due to a natural disaster that has already occurred at their holiday destination, instead of waiting for the FCDO to advise against travel. 

If this is covered, it tends to only be explained in the cancellation section of the policy wordings (an area where few customers will look).

Staysure is an example of clearly illustrating on the product page that cancelling due to a natural disaster is only covered if the FCDO advises against travel.

Emergency Assistance 

The level of emergency assistance available to customers if they fall ill abroad is another common complaint. Providers should make it clear that if policyholders are taken to a private hospital for treatment, they may not be covered for the treatment that they receive. 

Most providers do not mention this and it is usually very difficult to find the relevant information in policy wordings. Providers such as Allianz and Insurancewith do mention that cover would not be available in private hospitals. But this isn’t easily accessible on their main product page - customers have to search for it.

The importance of buying travel insurance early

For consumers to fully benefit from their travel insurance policy, the best time to buy it is immediately after booking your holiday. This is because cancellation benefits start as soon as the policy is in effect and protect customers against any eventualities that may force a change in plans. It’s also true that certain events, such as strike action and natural disasters, are not covered if they were known about before the customer purchased the insurance. As a result, buying travel insurance early is important to fully benefit from the insurance. 

To avoid customers missing out, providers that sell travel insurance as well as holidays should warn customers that buying a policy just before their holiday begins could result in missing out on important cover. 

Conclusion 

The Consumer Duty rules, which came into force in 2023, have made consumer understanding a key requirement for insurers. Whilst a few insurers have taken steps to improve their quote and buy journeys to deliver better consumer understanding, there is still much room for improvement. 

To help customers get value out of travel insurance it’s important that firms do what they can to help customers understand the key information in their policies. To do this, I hope that providers look into adopting some of the examples of best practice mentioned above.