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Travel disruptions around the world are increasing demand for premium insurance

As flight delays, cancellations and other disruptions are on the increase, businesses and leisure travellers are becoming more discerning about the type and level of insurance that they purchase.

Travel disruptions have increased around the globe since 2019. This is due to COVID-19, extreme temperatures, volcanic eruptions or military conflicts, as well as computer problems, fires, and jet safety issues.

Air traffic controller shortages in the U.S. and outdated technology have led to significant disruption. In May, equipment failures, runway construction, and staffing shortages led to flight cancellations, delays, and diversions at Newark Liberty Airport, one of New York City's main airports.

Israel launched an attack on Iran last Friday, forcing airlines to cancel or divert tens of thousands flights in order to avoid a conflict.

Many insurance policies have a variety of exclusions.

According to nine interviews conducted with travel executives, insurers and analysts, travellers are increasingly opting for higher-end policies that come at higher prices to protect themselves.

Duncan Greenfield Turk, CEO Global Travel Moments in London, said: "We are in a time that is quite unstable, so people cancel more often than before."

According to Allianz Partners, German insurers, European tourists increased their travel insurance purchases for this summer by 3 percent compared to last year.

Squaremouth, which is the largest travel insurer in the U.S.A., saw a global increase of 34% in "Cancel for Any Reason" coverage.

Travel for Allianz Partners CEO Anna Kofoed said that British and U.S. tourists are willing to pay more to protect their vacation.

According to InsureMyTrip, data shows that from January to April 2024, 32% more travelers worldwide requested a quote for travel insurance.

Businesses seek travel advice

As a result of President Donald Trump's announcements on immigration restrictions, including stricter visa vetting and travel bans, there has been an increase in demand for tailored travel advice.

World Travel Protection, a global company that advises on travel risks and provides advice to businesses, has reported an increase in U.S. citizens being detained by U.S. border officials who inform them their documents are no longer valid due to changes in visa rules.

Frank Harrison, WTP's regional director of security for the Americas, said that WTP worked with U.S. Government representatives to assist these individuals in returning home.

Harrison stated that "we're seeing an increase in the number of organizations who come to us to ask how to navigate within the U.S. business landscape."

According to Steven Diehl, CEO of CIBT which offers non-legal immigration and visa guidance, the number of inquiries from companies looking to better prepare employees for travel in the U.S. has increased by 50% since November.

HIGH-END PRODUCTS OF INSURANCE EMERGE

Parametric insurance is one of the newer areas of business. It pays out compensation after an "trigger event" such as a delay in a flight without the need for a claim.

In some countries, parametric insurance has been a big hit during the COVID-19 epidemic. More insurers have started to offer this product in the last few months.

Mawdy, the Irish unit of Spanish insurer Mapfre, found that when instant compensation is included in travel insurance packages, about 11% more customers choose higher-tier policies.

This burgeoning industry has also attracted the attention of travel destinations.

Marriott Bonvoy offers weather insurance for villa rentals and waterparks at the time of booking. This automatically pays out in case it rains.

Sensible Weather is one such provider. It reported that its weather guarantee was added to 30% theme park bookings, and 10% of bookings for higher-valued accommodation, when it offered them in 2024.

Squaremouth launched in March a new cruise insurance product that includes benefits like coverage for missing a port of call or being confined to a cruise ship.

"Everyone wants to make it clear that every trip (...) will have different concerns, whether it is hurricanes, blizzards, or what is happening with air traffic control," said Suzanne Morrow CEO of online insurance broker InsureMyTrip. (Joanna Pluncinska in London and Henry Gale, Doyinsola in New York. Editing by Josephine Mason & Elaine Hardcastle).

(source: Reuters)