Briefing: What UK flight chaos means for insurers – and is parametric insurance key?

Air passengers have faced a huge amount of disruption over the last few days because of issues with the UK’s traffic control system.

On Wednesday (8 September 2026), Nats, the air traffic control provider, said it was investigating a “technical issue” that was causing disruption to flight departures.

The following day, it said that “our operations are stable and we continue to work closely with airlines and airports to support their recovery from the ongoing disruption to their operations”.

However, a lot of flight cancellations had to be made because of this situation. According to Flightradar24, 1,300 flights were cancelled to and from airports in the UK on Tuesday, while many more were impacted on Wednesday.

Insurance Times content director Katie Scott was among those affected. She had attended Monte Carlo’s Rendez-Vous de September (RVS) conference this week and was due to fly back on Wednesday, but was told at 3am her flight had been cancelled.

And with alternative flights selling out rapidly and there being no guarantee that they actually go ahead, Scott decided the best route back to the UK was getting a train to Paris and then the Eurostar back to London.

So, what should have been a simple hour and a half flight home turned into an expensive day trip across France and the English Channel.

Down to insurers

Scott is not the only one who would have had to spend extra to get home, while many others have been left stranded because of flight cancellations.

Under UK law, airlines are required to pay compensation to passengers when their flights are delayed or cancelled.

However, if the delay was caused by an “extraordinary circumstance” passengers will not be entitled to compensation.

According to the Civil Aviation Authority (CAA), UK law on flight compensation uses the term to refer to situations where delays or cancellations have been caused by things that are not the responsibility of the airline.

Given the Nats failure was not do with airlines, the CAA warned that passengers are unlikely to be due compensation from them.

The CAA said in a statement: “We have reminded airlines of their responsibilities to look after passengers whose flights have been delayed or cancelled. We consider that disruption caused by the Nats outage is likely to be considered the result of ‘extraordinary circumstances’ under passenger rights rules. This means that although passengers should be looked after by airlines, they are unlikely to be entitled to compensation for delays or cancellations that were directly caused by the incident.”

This means that affected travellers are likely to turn towards their travel insurance policies rather than their airlines, which is likely to mean a very busy period for insurers.

Parametric insurance 

In my opinion, this is where parametric models should come in.

Parametric insurance is where the trigger and claims payout are pre-set, meaning claims processing time is reduced.

It may be especially helpful in dealing with a large amount of claims likely to come because of the air traffic control system issue. For example, there could be a system where insured travellers who register their flight schedule could get compensation quickly should a delay or cancellation occur on an outward, connecting or return flight.

And what adds to the demand for parametric insurance is that this is not the first time there has been major disruption. In 2023, UK passengers were hit with flight delays and cancellations due to a technical failure that meant controllers were not able to automatically process flight plans.

In 2024, meanwhile, an IT outage related to American cyber security firm Crowdstrike saw planes grounded and flights delayed.

Speaking in 2024, Blink Parametric chief commercial officer Sid Mouncey said that such incidents serve as “a reminder to insurers to look at real-time parametric solutions as they combine delivering genuine customer support at the time of need with operational and cost benefits every day”.

He continued: “We have a busy pipeline of insurance and brand partners that are ramping up their claims responsiveness and customer care efforts to deliver effective support in real-time.”

So, given the real-time assistance and reduction time in payouts, having parametric propositions seems to be becoming more key, especially as global events continue to shape the travel landscape.