In the midst of high fire threats in Greece and scorching heat during the peak summer holiday season, it’s important to address some key questions. Let’s delve into the topic of travel insurance and its significance.
So, what exactly is travel insurance? Travel insurance primarily serves as protection against the exorbitant costs of emergency medical care while traveling abroad. However, it’s crucial for travelers to thoroughly review the specific terms and conditions provided by their individual insurers and tour operators.
But what happens if you fall ill due to heat or if your accommodation is affected by wildfires? In such cases, Aviva, an insurer, would cover the expenses of medical care and even facilitate your return journey if necessary. Furthermore, Aviva would also bear the cost of relocating you to an alternative accommodation should your original booking become uninhabitable due to a wildfire. Ergo, a German insurer, would cover any additional expenses incurred if a traveler is unable to leave their destination due to a fire.
Now, let’s discuss what travel insurance does not cover. It does not provide reimbursement for trip cancellations due to personal decisions made by travelers in response to the heat.
Have there been any changes in the coverage offered by insurers due to the devastating Greek fires? Ergo stated that such events have been occurring for decades, indicating that they constantly assess the associated risks. Therefore, the intensity of the fires in Greece is not a reason for Ergo Travel Insurance to modify the scope of benefits they provide.
Will the Greek fires impact insurance premiums and insurers? According to Fitch, insurance premiums and terms have not been significantly affected thus far. Travel insurance is considered a niche product, and it is premature to observe any substantial changes. However, it is expected that there may be slight increases in policy prices. Robert Mazzuoli, a director in the insurance team at Fitch, believes that the COVID-19 pandemic posed a far more widespread risk for travel insurance, and suppliers did not reduce their capacity. He also highlights that the affected region in Greece constitutes only a small portion of the overall market.
Speaking of rising premiums, how much have travel insurance premiums increased and what are the reasons behind it? Marcos Alvarez, the global head of insurance credit ratings at DBRS Morningstar, states that travel insurance premiums have risen by approximately 10% this year compared to last year in many European markets. Insurers are striving to recover from the losses incurred due to the COVID-19 pandemic. Alvarez expects premiums to rise by another 10% next year. To compensate for these losses and provide additional coverage, insurers have introduced add-ons for travel disruptions, which come with extra premiums.
Now, let’s consider the size of the travel insurance market. It is relatively small in comparison to the overall global insurance industry. In 2020, US residents spent €1.5 billion on travel insurance, as reported by the US Travel Insurance Association. On the other hand, global insurance premiums were estimated to reach 5.6 trillion euros in 2022, according to Allianz.
Lastly, how are tour operators responding to the Greek fires? TUI, a prominent tour operator, had approximately 39,000 guests on Rhodes on Sunday evening. Out of these, around 7,800 were affected and relocated to alternative hotels or shelters. In response, TUI deployed six additional planes on Monday to repatriate German and British holidaymakers. The operator has also canceled upcoming trips to Rhodes, including all flights from Ireland until Friday. TUI is offering free cancellations or rebookings for other TUI destinations to accommodate affected travelers.
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