The travel industry was severely impacted by COVID-19. Early in 2020, within a matter of weeks, international travel halted, borders closed, major events were canceled, employers sent people home to work remotely, and schools closed their doors. As the movement of people came to a virtual standstill around the world, the travel industry immediately felt the impact. Spending on both domestic and international travel dropped 42% last year, from nearly $1.2 trillion in 2019 to $680.3 billion in 2020, according to the U.S. Travel Association. Corporate travel was the most dramatically impacted, with revenues dropping 70%, largely driven by the cancellation of trade shows, conferences and conventions as well as an overall reduction in general business travel. As the travel business goes, so too does the travel insurance industry, which experienced increased claims alongside decreased sales once COVID-19 kept travelers home. "While the pandemic has led to a rise in filed claims, it hasn't necessarily led to an increase in paid claims, as the pandemic is considered a known risk and excluded from many travel insurance plans," says Adrian Mak, CEO of business insurance research firm AdvisorSmith. "This reduction in travel has led to lower sales of travel insurance overall." In many cases, the travel industry has attempted to respond to the crisis with flexibility, allowing travelers to postpone and rebook travel plans without penalty. Likewise, travel insurers have also shown leniency in some cases. Allianz Partners, for example, has been temporarily accommodating claims for emergency medical care for insureds who become ill with COVID-19 while on their trip if their plan includes the emergency medical care benefit. Allianz Partners also has been honoring trip cancellation and trip interruption if an insured, their travel companion, or their family member becomes ill with COVID-19 either before or during the insured's trip, as long as the plan includes trip cancellation or trip interruption benefits, says Daniel Roth, vice president and head of agency at Allianz Partners USA. With vaccine distribution now becoming more widespread, consumer confidence is building, and travel is beginning to rebound. The leisure travel market is expected to pick up first, followed by the business-travel market. However, travelers are encountering new requirements that could impact their travel plans and their travel insurance needs. For instance, some countries are requiring travelers to produce a negative COVID-19 test result before traveling, some localities are beginning to require proof of vaccination, and some countries are even requiring visitors to have a travel health insurance policy in place before arriving at their destination. |

Pandemic prompts policy updates

When most people think of travel insurance, they think of trip cancellation benefits should they be unable to travel due to illness or other disruptions. But travel insurance can cover a whole host of travel disruptions and inconveniences depending on policy language, from common carrier delays due to weather or equipment problems, pre-departure cancellation if a pet passes away or a family member becomes ill, post-departure expenses related to illness or injury, emergency medical evacuation, and accidental death and dismemberment. Expenses associated with delayed baggage and ticket change fees are covered under some policies. When purchasing travel insurance, Americans say their top priority is coverage for trip cancellations or delays, medical expenses while traveling (for ailments other than COVID-19), personal accidents while traveling, delay or loss of luggage, and for returning home in the event of an emergency, according to a recent study by the travel insurance provider battleface®, which is underwritten by Spinnaker Insurance Company. The study found that almost half of Americans have faced fees or absorbed the cost of losses when traveling without travel insurance. The most common charges were for cancellation fees, fees for changing travel dates, fees for changing travel times, and costs associated with baggage loss or delay. During the past year, many travel insurers have clarified their policies to specifically address COVID-19 and what will and will not be covered. While some have excluded COVID-19-related claims, others are allowing coverage for COVID-19 losses and creating products and riders that address travelers' growing desire to have protection against COVID-19 travel disruptions. Many insurers also are responding to country-specific requirements. When Costa Rica announced earlier this year that it would open to travelers, it required them to have insurance that covers $2,000 per day of lodging in the event of quarantine as well as medical expenses due to contracting COVID-19. Travel Insured International created an optional Bed Rest benefit of up to $4,000 to help reimburse expenses associated with being quarantined at a destination as well as providing primary coverage and a $100,000 benefit limit for the plan's medical expense benefit, said Sherry Sutton, vice president of marketing at the company. "A suite of other optional benefits such as Event Ticket Registration Fee Protection and Travel Inconvenience for circumstances such as a beach closure, cruise disablement or diversion, and closed attractions, address the concerns of the modern traveler beyond unforeseen illness or need to cancel due to the pandemic," Sutton says. Trawick International updated its policies to provide coverage for travelers that might face a quarantine at their destination, says Bailey Foster, vice president for Trip Insurance at Trawick. The company's updated policies pay up to $2,000 per day for accommodations, meals and transportation related to COVID-19 quarantines, with options to buy additional coverage up to $7,000 per day. In response to COVID-19, Trawick also is providing trip cancellation coverage for job loss, Foster said. Roth says that Allianz Partners created an Epidemic Coverage Endorsement that covers claims related to COVID-19, or any future epidemic, according to the terms of the policies. In addition, Allianz Partners has added new epidemic and pandemic-related covered reasons for many of its plans, added a temporary accommodation that insureds not be subject to the trip interruption benefit's five-day maximum limit for additional accommodation and transportation expenses, and increased emergency medical coverage limits on a number of its most popular plans, Roth adds. Generali Global Assistance implemented a voucher program that allows customers who purchase insurance for a trip to apply their policy to rebooked or future vacations, a program which has proven successful as more travelers are now looking to rebook their travel plans as vaccination levels increase, says company CEO Chris Carnicelli. The company also announced it will support emerging smart vaccination and digital health pass initiatives by adding custom options to its travel insurance offerings and endorsing the Good Health Pass and the World Health Organization's Smart Vaccination Certificate Working Group Initiative, both of which are working toward creating digital health passes that guarantee travelers are healthy. "We thought it was important to begin addressing this issue head-on while these requirements are still being fleshed out instead of waiting on guidance from the government or NGOs," Carnicelli says. "While we saw the Good Health Pass and the WHO's Smart Vaccination Program as key initiatives in this area, our product innovations will be compatible with other health pass and smart vaccination programs." |

Common coverage gaps

While travel insurance covers many eventualities, there are some common gaps about which travelers should be aware. For instance, not everything inside your luggage may be covered in baggage delay or loss claims, says Nick Schrader, an insurance agent with Texas General Insurance. In addition, accidents from natural disasters that start before a travel policy is purchased also may not be covered, he adds. Travel insurance experts say it is important for travelers, along with agents and brokers, to understand the nuances of coverage within travel plans so they know exactly what will and won't be covered and set appropriate expectations. COVID-19 has highlighted another coverage gap — fear of travel. For example, in the pandemic environment, an increase in COVID-19 cases at the traveler's destination may cause individuals to want to delay or cancel their trip. But under most travel insurance policies, this would not be a covered claim. "I think every customer would want the fear of travel to be covered, and that's just something that we can never put in our policies because it's basically like buying a claim," says Trawick's Foster, who noted Cancel For Any Reason (CFAR) policies are an option that provides customers a way to fill that gap. "We've been really promoting that and letting customers know that it's still available." CFAR options typically have requirements attached to them regarding how far in advance they must be purchased — usually at least 10 days before travel and within a certain period of time after paying travel deposits — and how close to the travel date a trip is canceled. "Many plans do not cover trip cancellation resulting from fear of the pandemic, border closures, or state stay-at-home orders," says Sutton. "This is why it is important to consider Cancel For Any Reason coverage, as well as thoroughly review the covered reasons for trip cancellation stated in the plan. It is also critical to pay attention to any time-sensitive periods and other benefit eligibility requirements, as well as which benefits are optional, and which are included in the base travel insurance product the traveler is purchasing." |

Devastation leads to education

If a silver lining for the travel insurance industry can be found in the pandemic, it's that travelers are now more aware of the potential for travel to be disrupted. As a result, interest in purchasing travel insurance policies is on the rise. According to Battleface, 36% of respondents to its recent survey said they are more likely to purchase travel insurance for a trip abroad now than before COVID-19, and 34% said they are more likely to do so for a domestic trip. Generali's first Vacation Rental Barometer also found a surge in demand for travel insurance, with 70% of European and 54% of American respondents saying they would be more likely to purchase travel insurance in the wake of the pandemic. "This potential for growth in the travel insurance market is also supported by the top three coverages that reassured travelers," Carnicelli says. "The most important coverage was cancellation in the event of COVID illness, according to 43% of respondents, second was coverage for Medical Assistance & Repatriation (22% of respondents), and the third most popular coverage type was reimbursement of unused travel days in case a covered event interrupted their stay (20% of respondents)." Travelers also are learning about and purchasing coverage they might not have in the past, including for road trips, camping trips and staycations. "Staycations have gone through the roof as domestic travel requires a lot less planning and there is more flexibility," says Jeremy Foster, a self-proclaimed professional adventurer who founded the blog TravelFreak. "Traditionally, people are much more secure traveling within their own country, so the uptake of travel insurance is very low. Now with COVID and the uncertainty of local lockdowns, skeleton staff in resorts, etc., people have been investing in travel insurance for these domestic vacations and staycations to mitigate risk, meaning the travel industry is benefitting from revenue streams that were non-existent before." |

Operations adapt

In addition to changing risks, claims and policies, the pandemic has altered the way some travel insurance industry players are doing business. Carnicelli says Generali Global Assistance responded to the pandemic by modifying some of its operational processes to help gain efficiencies, particularly when call and claim volumes were at their peak. The company also rolled out a new phase of virtual assistance to customers, including chatbots and e-claims. "Similar to all other aspects of our lives, digitalization and automation are key trends that are changing the travel insurance market," Carnicelli says. "Whether it is a fully digital process of purchase, service, and claims payment or assistance from a virtual bot that leverages machine learning to assist customers in a travel servicing situation. From a product perspective, insurers will begin to leverage big data analytics to offer micro-insurance for a specific risk during a specific time frame." Agents and brokers have an opportunity to grow their travel insurance business in the COVID recovery period and post-COVID world by capitalizing on heightened traveler interest in purchasing policies. Educating customers will be key, says Roth, who noted Allianz Partners provides many tools for its travel industry partners to help spread the message of the value and importance of travel insurance. Kristen Beckman is a freelance writer based in Colorado. She previously worked for Retirement Advisor magazine and LifeHealthPro.com. Kristen graduated from the University of Missouri with a degree in journalism. She can be reached at [email protected]. See also: |

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