Disaster recovery: why travel insurance must clean up its reputation

Travel insurance has suffered a public relations battering this year.

The latest problem – the legal dispute between the Financial Ombudsman Service (FOS) and Europ Assistance, in which Europ Assistance wants a judicial review of an FOS decision not to make a test case out of an ash cloud complaint – is another body blow to the reputation of travel insurance.

The FOS has put 300 cases on hold until a decision is made on the judicial review, which will result in yet more unhappy customers having to wait for resolution on their travel insurance complaints.

A rough ride

In total, the FOS has dealt with 700 complaints over the ash cloud, and a general rise in travel insurance complaints, at time when travel insurance premiums are rising.

There have also been some high-profile cases hitting the media, such as Michael Lonergan, who was paralysed in a holiday diving accident and the insurer had refused to pay out, meaning he was stuck in Turkey with his family trying to raise £40,000 for his repatriation.

So what can insurers and brokers do to improve relations with the public?

Good communication

Despite all this damage to the reputation of travel insurers, the industry has a very strong defence in that if the customer understood thoroughly the meaning of their insurance contract before embarking on travel, there would be far less complaints.

This is where brokers can play as vital role.

AXA intermediary and partnerships director Mike Keating says insurers must make sure that customers understand as clearly as possible the terms and conditions of their policies.

Brokers can help by ensuring that customers have not excluded details on their application form, for example.

Keating says: “It’s about improving the education so that people understand the consequences, and working with partners and brokers to educate them thoroughly.

“You need to work through the conditions and exclusions. It is a piece-of-mind process.”

Full disclosure

One area, for example, that needs proper explanation to the customer relates to medical conditions. The customer, whether going direct or through a broker, must be aware that all medical conditions need to be declared before travel.

Insurers are particularly keen for full disclosure, because they are having to grapple with soaring medical expense costs, especially from America.

FirstAssist Insurance Services managing director Alistair Hardie agrees: "Non-disclosure of medical history remains a factor in travel insurance complaints and is certainly an area the industry must focus on.

"Our experience shows that many disputes are also over the actual terms of the policy and what it covers. As such, helping customers understand exactly what they have bought upfront and clearly explaining where the limit of their insurance lies will help reduce complaints in the future."

United front

Finally, what might also help the industry is a collective voice in promoting the value of travel insurance.

As Keating points out, a travel insurance policy costs very little when you think that it could save individuals from very costly bills. It also offers huge piece of mind for travellers.

It won’t be easy, but somehow insurers need to find a clear voice in promoting the benefits of travel insurance, while communicating its limits, following a year of negative publicity.