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50% of Aussies not covered for COVID-19 by travel insurance

·Finance reporter
·4-min read
A man and woman holding hands outside an airport
Half of all pandemic-related travel insurance claims have been denied since March 2020. (Source: supplied)

Almost half of Australian travellers were not covered for pandemic-related reasons when purchasing travel insurance, despite purchasing such a policy for pandemic protection.

That’s the takeaway from a survey commissioned by Cover Genius, which found half of Aussies with travel insurance since March 2020 had their pandemic-related claims rejected. This represented the second-highest amount of rejected pandemic-related claims globally.

Cover Genius CEO Angus McDonald told Yahoo Finance the survey specifically asked if respondents purchased travel insurance for pandemic-related issues and made a claim for pandemic-related issues.

“And if the claim was rejected - did the policy cover what they thought it would? This is the 50 per cent figure we refer to,” he said.

Some 39 per cent of survey respondents were planning to switch from their current travel insurance provider due to dissatisfaction with their claims experience.

Lack of clarity

McDonald said the dissatisfaction may well be a result of a lack of understanding on the part of the customer, as well as a lack of clarity in insurance policies.

“The broader issue is more likely that customers did not fully understand the product purchased, as policy documents from traditional insurers are often complex and difficult to understand,” he said.

“In addition, insurers have not been clear on what circumstances are covered during the pandemic.”

Fewer purchasing policies online

The survey revealed a further 40 per cent of travellers would prefer to purchase travel insurance directly from their travel provider or agent, up by 13 per cent in the last 18 months. 

After the unprecedented turbulence for travel with changing borders and lockdowns, travellers are seeking reassurance and support that will be tailored to their specific needs and situation.

Travellers queue at a check-in counter at an airport.
With international travel opening back up, insurance is a legitimate concern for travellers. (Source: Getty)

Of those who purchased with a travel provider, 68 per cent said they would purchase from them again. 

However, for those who went with online insurers, almost half (46 per cent) vowed to switch providers, while 42 per cent of those using their health insurer for protection wanted to change.

Proof is in the scores

Travel insurance can get a bad wrap, as shown in the Net Promoter Score (NPS) of -43 for all post-claim travel insurance. 

The NPS is the classic ‘how likely are you to recommend this product to a family or friend’ question; considered to be a gold-standard metric for collecting data on a customer's experience.

The survey uncovered a correlation between the length of time to process a claim and the NPS score. 

Australians with free travel insurance through their credit card rated their post-claim experience -46, with an average 17-day process to complete the claim.

However, despite more people vowing to stick with their travel agent or provider's insurance, they scored the worst NPS score of -57, followed by credit cards, then online insurers and corporate policies tied at -30 and health insurers' claims processes being voted least worst at -20.

Aussies want a ‘digital-first’ experience

McDonald said travel sites had seen a boom in customers seeking additional insurance protections.

“Since the start of COVID-19, our network of travel partners have seen a 647 per cent increase in attach rates, showcasing the accelerated need for protection,” he said.

The survey results showed savvy travellers were looking for insurance offering faster payments, clearer policy wording and to only have to supply their claims information once - preferably online.

“As customers expect a digital-first experience, now is the time for major brands to step up and protect their customers with embedded, hyper-relevant products that reduce friction and are fit for a future where customers increasingly want their protection to come from their favourite brands,” McDonald said.

Time will tell as to the impact of COVID-19 on travel insurance, particularly for those who have had COVID, making it a pre-existing condition that is likely exempt from coverage. 

So, is pandemic cover in your travel insurance worth it? McDonald thinks so.

“There's still value in getting protection—it's something travellers look for," he said.

"They just need to plan around the risk of COVID-19 and fully understand the inclusions and exclusions of their policy.”

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