A Look into the Future: Travel Insurance Trends in 2024

A Look into the Future: Travel Insurance Trends in 2024
A Look into the Future: Travel Insurance Trends in 2024

State of the Insurance Industry in Australia: Optima Report Reveals Insights

Each year, Finity releases the Optima report, providing a comprehensive analysis of the insurance sector in Australia, including the travel industry. The latest Optima report sheds light on the overall health of the insurance industry, particularly in relation to Covid-19 coverage.

Steady Loss Ratio Indicates Adequate Coverage for Covid-19 Claims

According to the Optima report, the gross loss ratio for FY23 remained consistent at 45% for APRA-authorised businesses. This figure aligns with the previous year’s ratio and reflects the long-term average. The report suggests that premium increases have effectively compensated for the increased claim costs arising from Covid-19 coverage.

Covid-19 Continues to Impact Travel Insurance Claims

A study conducted by Southern Cross Travel Insurance (SCTI) earlier this year highlighted that Covid-19-related disruptions persist as a significant issue. These disruptions accounted for 11% of all claims paid to customers in Australia and New Zealand, despite a decline since September 2022.

Reviewing international comprehensive policy data, SCTI found that claims related to cancellation and travel disruption due to Covid-19 incurred an average cost of $1,500 per claim. Jo McCauley, CEO for SCTI, emphasized that Covid-19 remains a prominent reason for customer claims and is expected to impact travelers for the foreseeable future.

High-Value Claims Stemming from Medical Care and Repatriation

Todd Nelson, CEO of Cover-More Travel Insurance, shared insights into the largest claim made through their company in 2023. The claim was related to emergency medical care for a customer in the US and their subsequent repatriation to Australia, exceeding $1.1 million.

Nelson emphasized the significance of having adequate travel insurance coverage, particularly for overseas medical care and hospitalization. He highlighted that the Australian Government’s Smartraveller advises, “if you can’t afford travel insurance, you can’t afford to travel.” Cover-More Travel Insurance witnessed numerous medical claims in 2023, including several for moped or motorcycle accidents in South East Asia. Nelson stressed the importance of travelers securing appropriate insurance coverage based on their planned activities during their holiday.

Author’s Perspective: Insights and Conclusions

Reflecting on the Optima report and industry trends, it is evident that the insurance sector in Australia, specifically travel insurance, has been significantly impacted by the ongoing Covid-19 pandemic. The steady loss ratio indicates that premium increases have effectively managed the increased claim costs associated with Covid-19 coverage.

Furthermore, the study conducted by SCTI highlights the continued prevalence of Covid-19-related disruptions in travel insurance claims. This serves as a reminder for travelers to prioritize comprehensive coverage that addresses potential cancellations and travel disruptions due to the pandemic.

The high-value claims related to medical care and repatriation underscore the importance of having adequate travel insurance coverage, particularly for unforeseen emergencies. Travelers should heed the advice of industry experts and ensure they have appropriate insurance in place to safeguard against potential financial burdens arising from medical expenses abroad.

About the Author

“As an industry expert in travel insurance, I have witnessed firsthand the impact of the Covid-19 pandemic on the insurance sector. It is crucial for travelers to understand the evolving landscape and prioritize comprehensive coverage to protect themselves financially. Stay informed and make informed decisions when it comes to travel insurance.”

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