Travel insurance in huge demand thanks to Covid-19: Southern Cross Travel Insurance research

Covid-19 almost killed the travel insurance industry. Now the virus is driving its revival as travellers seek the best cover.

Sydney Airport queues highlight the enthusiastic embrace of air travel since borders fully reopened. Picture: Lisa Maree Williams/Getty Images

After Covid almost killed the travel insurance industry in the last two years, the virus is now stimulating huge demand for cover as travel takes off.

Research by Southern Cross Travel Insurance showed Covid-19 cover was what most travellers looked for in a policy, behind price and flexibility.

SCTI chief executive Jo McCauley said between January 1 and May 30, they had paid out $630,690 to Australians hit with unplanned expenses after contracting Covid-19 while they were overseas, before they travelled or during a domestic trip.

Ms McCauley said Covid-19-related claims now accounted for a third of all international and domestic claims, with payouts averaging $2600 for overseas travellers and $1800 for domestic.

“They are relatively small claim values but they are frequent in terms of what we’re seeing at the moment,” she said.

While most of the claimants were not hospitalised, they were left out of pocket by having to stay longer than planned at their destination, make flight changes and undertake more Covid-19 tests than would normally be required.

The research showed the majority of claimants contracted Covid while travelling in the US, with domestic holiday-makers not far behind, and visitors to the UK third.

Ms McCauley said that was expected to change in coming months as Australians reverted to more “traditional” travel patterns.

“What we’re seeing now is that Indonesia including Bali is the top destination for Australians with 16 per cent of our travel insurance policies covering trips there,” she said.

“The US is still really strong at 8 per cent, New Zealand is now growing at over 6 per cent and Fiji and Thailand are in fourth and fifth place at 6 and 5 per cent respectively.”

While restrictions around Covid-19 continued to ease in many countries, Ms McCauley said it remained top of mind for travellers with SCTI already back to 70 per cent of 2019 policy sales levels.

“We’re seeing our customers contact us a lot more than they would ordinarily and our average handling time on the phone has also increased because people have got a lot of questions about the Covid-19 cover we offer and how it would apply in their situation,” she said.

“They’re really starting to engage with their travel insurance policy in a way that they didn’t previously which we absolutely welcome.”

Although SCTI had approved more than 80 per cent of claims made for Covid-19-related travel dramas, 8 per cent were declined due to insufficient paperwork or a range of other reasons.

Ms McCauley said these included claims made by travellers who contracted Covid-19 in countries with a level three or four government travel advisory rating.

Countries currently ranked as level three or “reconsider your need to travel” included Sri Lanka, Samoa, Tonga, Brazil and Mexico.

Being a “close contact” of someone who contracted Covid-19 was also not a legitimate reason for making a travel insurance claim, Ms McCauley said.

Nor was cutting short a trip due to Covid-19 infection, even though the remainder of the journey was unaffected by their Covid-positive status, she added.

“Our Covid-19 cover only covers travel changes and cancellations caused as a direct result of contracting Covid-19. It doesn’t cover changes to the journey based on personal preference or peace of mind,” Ms McCauley said.

Ms McCauley encouraged anyone planning a trip to look carefully at the travel insurance on offer, and know what it covered with regards to Covid-19.

Originally published as Travel insurance in huge demand thanks to Covid-19: Southern Cross Travel Insurance research