AXA to introduce price hikes for Christmas holiday season
Travel insurers are pushing through double-digit rate increases, citing soaring medical expenses and an increase in the frequency of large losses.
AXA, the largest insurer in the £700m travel insurance market, is putting through the rate rises in time for the Christmas holiday season in both broker and direct.
Personal lines director Mike Keating said the size of the increase would vary according to the state of book, but the overall average would be in the “double-digit” zone.
He cited the rising costs of medical care in Europe and America, along with fraud, as contributing to claims inflation in a market which was “historically under-priced”.
Actuarial evidence has also shown large losses occurring with increasing regularity, although Keating said he could not pinpoint the exact reason for this.
He said: “The market requires a double-digit increase to meet medical costs inflation and an increase in frequency of large losses.
“There’s also a need to ensure that there are proper claims and processes in place. Fraud and leakage detection need to be paramount to mitigate unnecessary costs.”
Alistair Hardie, managing director of FirstAssist, which underwrites around £85m in travel insurance, agreed that medical costs, especially in the USA, were rising steeply.
He added that customers were taking more notice of their travel policies, especially since the volcanic ash problems, and were more likely to claim.
He said: “We need to see some clear increases in premium. It’s certainly true from our point of view, and where we’ve been dealing with large schemes, typically we have been talking about putting those sorts of increases in place.”
An Aviva spokesman said: “The travel insurance market is affected by medical costs inflation but generally we would not expect this factor alone to be the driver for the need to increase rates.”
In a separate point, Keating said he was seeing an increase in alcohol-related injuries, such as accidents from rock divers and balcony jumpers, which often fell outside policy cover. This was tainting the image of travel insurers, he said, adding that customers needed to receive better explanations of their travel insurance.