Travel insurance sales remain elevated post-pandemic, but coverage demands are evolving
Post-pandemic, coverages for lost bags and missed connections have soared. Both saw recent triple-digit sales increases.
As air travel picked back up following the pandemic, demand for travel insurance grew as some destinations continued to require coverage and negative COVID-19 to gain entry. While these requirements have fallen away, demand for travel insurance continues to see growth, according to Megan Moncrief, chief marketing officer for Squaremouth, Inc., who notes the reason travelers are buying coverage is evolving.
“Interest in COVID and COVID-specific coverage is decreasing, but with that is an increase in travelers wanting coverage for baggage delays and other airline-side issues,” Moncrief says.
As airlines stumbled out of the pandemic and into a stream of difficulties that resulted in delays, cancellations and lost luggage, the benefits insurance provides became much easier for travelers to grasp. Over the summer, when airlines were struggling mightily with staffing issues and widespread delays, travel insurance saw a 70% increase in sales, according to Moncrief.
Looking at data from this past winter travel season, Squaremouth saw a 120% increase in searches for baggage delay coverage and an 85% increase in policies sold. Policies covering lost luggage saw a 101% increase in sales, while missed connection coverages saw a 138% sales increase.
Additionally, Moncrief says that traditional travel insurance buyers — retirees and older consumers — are traveling more as we get further from the pandemic. This is helping lift travel insurance sales. However, the average age of travel insurance purchasers is still skewing younger than it had in the past.
Winter airline snarls & claims
During December, the news was flush with videos and images featuring mountains of unclaimed luggage and packs of stranded travelers. While this served as one of the best advertisements for travel insurance, it didn’t result in a flood of claims, according to Moncrief. During the first week of January 2023, Squaremouth’s claims team hadn’t seen a notable increase in reported claims.
“Anecdotally, this isn’t too different from what we saw over the summer, in terms of short-staffed airlines, lost luggage and widespread delays,” she says. “We saw no increase in the percentage of paid claims for airline-related delays throughout the summer season compared to the rest of the year.”
She explains this is because the availability of coverage depends on how the airline defines the cause of the delay or cancellation.
“Airlines will usually blame anything other than staffing, as they are only required to reimburse their customers if they cause the issue, so ‘weather’ typically becomes the culprit,” Moncrief says. “However, if the delay or cancellation ultimately cancels an entire trip, cancellation and interruption benefits would apply, and they come with a much more specific list of covered reasons relating to airlines, usually limited to strike, mechanical breakdown and weather.”
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