Airlines and airports ‘generally haven’t bought BI policies, so the full risk lies with them’ says insurer
Insurers are paying out travel insurance claims triggered by the Icelandic volcano, but have very little exposure to business interruption (BI).
Aviva, AXA and Fortis are just a few of the big-name insurers that are partially paying out for travel disruption.
But there have not been any reports of insurers paying out BI clams, whether in relation to the financial loss for the airline industry or companies that have not had their cargo transported.
A spokesman for Talanx AG’s unit HDI-Gerling – one of the largest insurers of German aviation companies including airlines and airports – Dr Christoph Groffy, said: “Business interruption policies are expensive and generally airlines or airports haven’t bought them, so the full risk lies with them.”
New York-based Insurance Information Institute’s president, Robert Hartwig, said: “Even though the event is going to be very, very expensive, costing billions in terms of economic losses, it’s unlikely that much of it will be insured.’
An Aviva spokesman said the insurer did not offer BI cover for incidents such as volcanic ash.
Regarding travel insurance, it said the airline or travel operator should pay for the cost of the missed flight. But as a “goodwill gesture”, Aviva is considering delayed departure benefit for every full 12-hour period a policyholder’s flight is delayed.
Meanwhile, AXA said it provided some insurance under missed departure cover and extended delayed departure cover.
Fortis said it was treating the incident as a bad weather event, and customers should check their policies. Equity Insurance also said that customers could claim benefits under their policies.
Biba confirmed that its Biba Protect travel insurance policies, underwritten by Tokio Marine Europe Insurance Ltd and purchased from a Biba broker, will cover travellers for travel delay or cancellation after 24 hours.
Technical and corporate affairs executive Graeme Trudgill said: “We are confident that all volcanic ash claims under the Biba policy will be met.”
TUI Travel, which includes the Thomson, First Choice and Airtours brands, said the cost so far of meeting the needs of its 100,000 customers had been around £20m.