We have invited Sean Bemrose, Managing Director of an Australian insurance brokerage, to discuss the changing environment of the travel insurance world and covid19 related issues. Here is the summary of our conversation recorded July 2, 2020.
How has insurance for travel planners changed due to the pandemic?
Travel business itself is changing, and generally liability insurers are considering it more risky than before, so business insurance providers tend to ask more questions from the business owners, such as:
- What is your risk management plan?
- How do you identify injury risks for your travelers?
- Do you have experience dealing with emergencies? Etc.
Travel planners should be very cautious giving insurance advice to travelers, because financial planning advice requires a license similar to the one of insurance brokers. When advising, stick to the facts, like: “If you injury a leg overseas, someone will need to pay the bills”.
For the sake of accepting your clients’ money as a business you are quite entitled to put some caveats around it, and one of those caveats might well be – to participate in this trip you must demonstrate that:
- You are medically fit
- You are aware of the circumstances of the journey you are going in
- Because of the risks of getting injuries or sickness overseas, which is not covered by medicare, you need to have travel insurance
That is a form of a liability waver you should require. It will help you protect yourself in case of emergencies.
Hoes does travel insurance cover domestic travel?
Many travel planners are refocusing on domestic travel, which is generally easier to cover, especially for Australian residents with Medicare within the territory of Australia. However you should be aware that travel insurance normally does not cover medical costs of the Australian residents traveling within Australia. Yet it may cover the cancellation costs depending on the terms.
Should a travel business reconsider Refund & Cancellation Policy when relaunching post-covid?
It’s a difficult question. Many travel deposits are determined as non-refundable. Traditionally travel insurance police gives you a 14-day cooling off period. Outside of that period you accept that you have a travel insurance until you complete your journey and for that period you can make your claim at any time. Covid19 put everyone in a complicated position. If the travel insurance had a pandemic exclusion, you can’t travel, but you won’t get paid for the cancellation either, so it makes it hard to maintain the stands on non-refundable deposits. If the insurance policy provided cover, that’s a different story. But there should be a general understanding that when a business provides something to you, it involves expenses. There may be an argument for some kind of proportionate refund, Personally, I believe it is not fair for the businesses that provided work to not be compensated for that work, at least proportionally.
How can we clarify Terms & Conditions to explain the shared risks in case of cancellations/refunds?
It’s a commercial decision and it’s business specific. Credit is probably fair. The conversation with clients should explain the loss of profit on both sides. After all, If your travel insurance didn’t provide the coverage, that is unfortunate.
Will travelers be covered against Covid-19 going forward?
Generally, private (leisure) and corporate travel are served with separate insurance packages. Corporate plans are designed for business travelers and are traditionally much more open and inclusive, many would not exclude even per-existing conditions. Now more and more we see exclusions of covid-related medical expenses even from business travel insurance policies, which may become a fundamental issue for Australian travelers. It probably will be one of the biggest topics for travel insurers in Australia.
How can travel businesses support their clients and help them get as much coverage as possible?
Ultimately there might be an opportunity for collectives to try and make a bulk purchase of the insurance cover through an intermediary, such as insurance brokers. There might well be more generous coverage than an individual one. Right now there is high uncertainty in the processed of underwriting, but ultimately finding a travel broker to write insurance for the group of travelers may be their best choice.
If you are doing yourself and travelers a favor getting a recommended package you then need to make that policy and conditions of the agreement very clear to your clients. Normally you should expect the travel insurance intermediary (broker) to take the responsibility of setting the right expectation around the insurance policy details. As a travel business, you are not selling the insurance, you are referring it.
How much does insurance cost relate to the coverage?
It certainly does. Factors like pre-existing medical conditions become especially important with age and may include extra charge.
What about insurance offered by banks and credit card companies? Travelers tend to love them.
Depending on the client they may be fine, but it’s important to consider age and pre-existing medical conditions. Most of these policies stop at age of 70-75. We don’t know where the credit card insurance policies will go post-covid, that’s yet unknown.
Should travel planners re-think Terms & Conditions post-covid?
You should do a reasonable research of the risks and provide fair explanation to your clients. State your “dos and dont’s” and make sure clients understand them. You should review your risk management plans to make sure they cover in case of a pandemic.
It’s about your terms and conditions covering you in clarification around non-refundable deposits, if you are offering credits, if you are requiring insurance, and lately covid-related questionnaires asking questions like:
- Have you been tested?
- Have you been exposed?
- Where have you been in the last two weeks? Etc.
This is you trying to protect the collective.
What about Cancel For Any Reason (CFAR) travel insurance options?
Cancel for any reason policies are not offered by Australian underwriters, and that is not likely to change any time soon.
What is the difference, insurance wise, between tour operators who deliver trips, and travel advisors who offer their expertise?
When you give a professional advice and clients follow your advice suffer some kind of damage, usually financial damage, you need what is called Professional Indemnity Insurance. That’s the coverage reals estate brokers and financial advisors purchase. That is the insurance travel advisors should obtain, which is a different type of liability from traditional tour operators.
If your advice is pretty generic, the liability is minimum, however a very personalized advice related to client’s age physical conditions, budget, hopes and dreams, etc., and particularly if you charge for that advice the exposure goes up, and the risks of being sued are significantly higher.
As a rule of thumb, you buy as much insurance as you can afford, and you manage the risks you leave uncovered by the insurance policy.
Should travel planners consider cyber insurance?
Yes. First, due to the amount of data uploaded online that can be stolen, like your database. Second, if you have some information on a person that is identifiable and could be considered as private, you potentially could be sued for it, which is a cyber liability, there may be government fines involved into that as well.
Jennier Fein, CEO of YouLive To Travel:
In our case, YouLi platform is a data steward, so our responsibility is to protect clients data to the degree that we can through encryption and security practices. Our clients, the travel companies, have direct responsibility in terms of protecting travelers’ data and pass them on to us to ensure that we are doing our best in our practices.
Cyber security policies can help you cover the costs of ransom if those appear in case of theft, and will pay the legal expenses in case of law-suits. Generally cyber security policies are not that expensive for small businesses and more often now become part of business liability packages. As a general advice on that topic, make sure you back up regularly, and do not save your back up on your server.
This is a time when we should be reassessing our policies to make sure we address the changing circumstances. It makes sense to evaluate all the risks of conducting business and update your policies accordingly. If you are not comfortable doing it on your own, seek for professional advice from insurance brokers and legal advisors. And very importantly, remember to communicate the risks to your customers. Get comfortable articulating the risks of travel and make sure you revise your terms and conditions regularly based on previous experiences.
Given that now people are aware of the pandemic issues and will be asking you questions about it. Knowing you are up to date customers will simply feel more comfortable buying travel from you.
We thank Sean Bemrose of Tony Bemrose Insurance Brokers for sharing his professional experience and hope you find this conversation helpful.
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