The uncertainty that has accompanied the Covid-19 pandemic has put the travel industry into a huge amount of debt, and it could get a lot worse 

Insurance firm International Passenger Protection (IPP) has predicted more collapses in the travel insurance sector for 2021 and beyond.

This is according to IPP’s managing director Paul Mclean. He told Insurance Times that due to the UK being plunged in and out of lockdown during the Covid-19 pandemic, “the travel industry is in the worst possible place”.

This is because companies in this sector are now in huge debt, he added.

Due to the ongoing pandemic, many insurers are pulling out of the financial failure insurance (FFI) market and, as of January this year, policyholders will therefore struggle to obtain cover that will comply with the Package Travel Regulations.

In turn, this means that affected businesses which fail to adhere to the regulations will be unable to trade.

Totally irresponsible 

Mclean explained: “We have seen a large increase in enquiries and not all [of these] can be insured if the risk is uninsurable, but we are - in most cases - coming to the aid of customers where their insurer has pulled out.”

Because of the number of insurers exiting the market, Mclean estimates that “from the second quarter, we will start to see through 2021 [and] into 2022 a large level of collapses, small and large, so this sector will remain very challenging for some time to come”.

He added: “It is totally irresponsible for anyone to think everything will be fine once normal trading starts once more.”

IPP continues to write FFI.