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When it comes to travel, there are two types: 1) those who buy travel insurance, show up at the airport 3 hours early and prefer fanny packs 2) others who are comfortable asking people to skip the line at security because their door is closing in five minutes.
In the era of Covid, there have been far too many cases for the travel insurance industry to handle. And now that people don’t look anymore In Brugge on Blu-ray 1,000 times during lockdown to go on holiday to the real Bruges – travel is booming and the number of people filing claims has increased in our still pandemic-free times. And the industry was left to lick its wounds and think about its future.
- Cover-More subsidiary of Zurich Insurance Group said The Wall Street Journal that the lack of available flights doubled the cost of repatriating a customer following a claim and that the cost of extending cover to include Covid-19 (it’s still there, remember) is 30% at 40% of risk costs for travel insurance. Marcos Alvarez, head of insurance at ratings agency DBRS Morningstar, told the WSJ that travel insurance is unlikely to be profitable for most businesses this year.
- The travel insurance industry’s gross written premium soared 13% to $17.6 billion last year, according to DBRS, which expects it to reach $60 billion. by 2030. This means that assuming airlines and airports sort things out, there are future profits to be made. Alvarez said that for now, travel insurers could raise rates by 20% to 30% in the short term, so better book now.
Pack it: Some insurance companies might simply choose to leave the trip to someone else. Last year, international health insurance group Bupa ended travel insurance at two of its units, citing how Covid had changed the business.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.