Are Holiday Insurers Fair to Claimants?

Financial Services Team Blog

James Carnegie

As we head towards the end of summer and reach the mid-point of the school holidays, many Brits are heading overseas or have recently returned from a break. For the vast majority of those who have come back, no problems will have been encountered, but for some an incident may have taken place and costs been incurred as a result of this. Hopefully the individuals involved were not one of the quarter of Brits who travel abroad without insurance.

Indeed, travel insurance is arguably one of the most important things to organise when planning a trip abroad. Amongst reports of Spanish hospitals charging holidaymakers for treatment, despite being covered, and claim rejections a regular occurrence (twice as likely as home or phone insurance rejections), it appears that we now need to be savvier than ever when taking out a policy. With tens of companies offering hundreds of different products, with numerous conditions and exclusions applying to each, it has led me to wonder whether insurers are fair when issuing travel insurance…

There are numerous factors to consider beyond price and all travellers have different needs and considerations. I think it is fair to argue that in the age of the internet it has become much easier to buy the travel insurance policy that is right for you than was previously the case. A quick look at the website of many insurers shows common questions asked to establish what kind of cover you may want: holidaying outside the EU, Winter Sports cover needed; age of people to be covered; existing medical conditions, etc. so far so good. Despite this, potential confusion and information overload can then set in when options are presented to the traveller. Surely this is inevitable though as insurers try to take account for as many permutations and customer needs as possible.

Many critics of travel insurers argue that terms and conditions are too long and companies are “sneaky” with the wording of policies in a bid to reduce their liabilities. I would argue that this is true to an extent, but ultimately, all of the information is there for customers to review before taking out a policy and all exclusions and excess charges are set out. Claims disputes are costly and timely for both the individuals and the insurance companies involved, so surely it is mutually beneficial for the latter to be as clear as possible when setting out the terms of its policies in a bid to avoid problems when a claim needs to be made.

The interpretation of many of these exclusions usually appears to be perfectly valid (injured whilst skiing, but no winter sports cover taken out). However, there are also occasions when it appears that rejections are particularly harsh on affected individuals (cancelling a trip because of an unexpected death of a family member before the policy officially starts). I would argue that there is scope for insurers to be more compassionate and use greater common sense when considering claims. Reassuringly, checks and balances of insurers do already exist in this sector, with unhappy claimants able to refer any issues to the Financial Ombudsman Service.

For now, potential policy holders should read the terms and conditions carefully and contact the insurer either online or, preferably, by speaking to someone to clarify any “grey areas”. This all takes a bit of time, but is half an hour well spent before departing if the worst should happen and a holiday doesn’t go to plan or happen at all!