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“Do not travel” warnings protect travel insurance firms in countries directly involved. The war in Ukraine might also increase consumer awareness and demand for extensive coverage.
Russia’s invasion of Ukraine is leading to a surge of activity for travel insurance companies as flight cancellations and tour operators shutting down trips to Russia have led many travelers to inquire if insurance policies will cover the disruptions to their travel plans.
“We have seen an increase in the number of travelers who are calling with questions about how travel insurance would help them if their trip is affected by the war. People are understandably concerned,” said Angela Borden, product marketing strategist with Seven Corners Travel Insurance.
While several travel insurance executives believe the sector industry has not taken any direct hit from the conflict or the unprecedented financial sanctions levied on Russia, the storm is far from over. The United States, United Kingdom and Australia have requested their citizens leave Russia as soon as possible in addition to issuing warnings not to travel to Ukraine and Belarus.
Those warnings trigger an exclusion for war, making possible benefits invalid in countries directly involved in any conflicts.
Federico Tarling, chief service officer for Assist Card International, explained that its services only exclude events that are caused by the war or are a direct consequence of it. “Due to the force majeure circumstance, Assist Card cannot guarantee the availability of its suppliers, and if applicable, we will proceed to refund,” he said.
Outside of traditional insurance firms, there are specialized plans for people who work in or travel to dangerous areas — from NGO representatives and politicians to doctors and first respondents. Dan Richards, Chief Executive Officer of Global Rescue, a company that provides such critical services, confirmed they have already seen an increase in demand.
“Uncertainty generally results in an increase in business for us,” Richards said. “Our operations teams are helping people on the ground around the clock, and also, the perceived danger makes more people want our membership.”
The Future of Travel Insurance
“The industry should not (be hit hard by) cancellations caused by this terrible event,” said Daniel Durazo, the director of marketing and communications for Allianz Partners, which is is donating more than $13 million (12 million euros) to the International Red Cross. “Nonetheless, we have not yet received calls from customers traveling in Russia. We are standing by to assist.”
One consequence of the war might be modifications to existing insurance products. “People will want to know that they are financially covered in case of a war in Europe. And on our end, I believe they will want medical and emergency response as well,” Richards said.
“If people stop traveling altogether, then business could decline. But it’s more likely they will adjust their timetable and destination,” Borden said when asked about the possibility of the conflict continuing. “Some travelers may be more likely to buy travel insurance with Cancel for Any Reason. It is the only way to have extra assurance that they can cancel their trip and receive reimbursement.”
She does not believe the events will affect the cost of insurance for leisure travelers, which is something Tarling agrees with.
“The value of traveling insurance might not be affected, even though it is clear many travelers will lose purchasing power,” Tarling said, adding the surge in oil prices will impact operational costs and possibility result in higher fares.
Nevertheless, the Assist Card executive believes the trend of consumers acquiring extensive coverage, which has grown during with the pandemic, will continue.
“(We’re seeing) that the demand and (reach) of our products will remain stable, due to a larger awareness of the need to travel protected with a wide and reliable service,” Tarling said.
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