Jim Meehan was supposed to be kicking off the new year with a six-week sojourn through Australia, capped off with a stop in Fiji on the way back to his Cape Cod home.
When he booked the trip through Pawtucket-based Collette Travel Service Inc. in December 2019, he also bought Collette’s Travel Protection Plan – which features more extensive coverage than he typically buys – because of the cost and duration of the trip. He never envisioned needing to use the $300 policy, which includes a “cancel for any reason” waiver, as well as extensive medical coverage through a supplemental insurance underwriter.
But as lockdowns started and COVID-19 cases spiked last spring, Meehan saw no way his early 2021 travel plans would play out safely. The insurance allowed him to cancel and rebook the trip for October, saving at least the $4,000 deposit he had already put down, plus any rebooking fees he might have otherwise been charged. An avid traveler, the retired Texas Instruments employee said he will likely never set foot outside the country without travel insurance again.
Indeed, interest in travel insurance, particularly cancel-for-any-reason, or CAFR, policies, has spiked since the onset of COVID-19.
Warwick-based IMT Services LLC, which runs the website InsureMyTrip.com that allows consumers to purchase and compare prices and packages from a host of carriers, reported a significant increase in CAFR-inclusive policies sold since Jan. 21, 2020, when the pandemic became a “named” event corresponding to new travel insurance policies and protections.
Jeffrey Roy, Collette’s executive vice president of revenue management and pricing, said he also observed an uptick in travel insurance purchases, especially as new travel plans take shape thanks to optimism about COVID-19 vaccines.
‘This pandemic has been shocking, but it’s the very reason why you purchase [insurance].’
JEFFREY ROY, Collette Travel Service Inc. executive vice president of revenue management and pricing
While a majority of Collette customers opted for the travel protection plan even before the pandemic, the latest round of trips booked following holiday-season promotions saw a 10% increase in travel insurance purchases, Roy said. He attributed the increase directly to the uncertainty over travel plans amid new lockdowns and spiking case counts, but also to a long-term shift in awareness of and appreciation for the “just in case” security that insurance offers.
“The whole point of insurance is to cover you for things unforeseen and unknown,” Roy said. “This pandemic has been shocking, but it’s the very reason why you purchase it.”
However, not all forms of travel insurance, particularly those purchased prior to the pandemic, covered the barrage of problems the coronavirus has caused. Canceling a trip out of fear of contracting the virus – versus due to travel restrictions or medically forced quarantine – would not be covered without a “cancel for any reason” clause, said Ronni Kenoian, manager of marketing and e-commerce for InsureMyTrip.com.
Whether forced group quarantines were covered – situations in which countries or states ordered certain visitors into quarantine – was also unclear, and largely determined on a case-by-case situation, said Michael Rotondo, managing director for travel services for AAA Northeast.
Most insurance providers tried to offer some flexibility even for policies that didn’t strictly cover health or cancellation-related concerns, evidenced by what Kenoian termed an “astronomical” number of claims paid out, along with refunds and deferments.
Allianz Travel Insurance, which offers insurance plans through partners, including AAA Northeast, paid out “millions of dollars” in refunds and claims to customers due to temporary accommodations instituted at the start of the pandemic, according to Daniel Durazo, a spokesman for Allianz Partners. For travelers whose trips were canceled because of travel bans, Allianz also issued full refunds for travel insurance premiums paid, or it let customers move the dates of their coverage to reflect rescheduled trips.
In response to increasing interest from prospective customers, insurance providers have also begun beefing up their offerings. Rewriting policies is a slow process subject to intense regulatory scrutiny, but in the meantime, many providers with InsureMyTrip have started offering “add-on” packages that expand the maximum dollar figure for medical coverage, for example.
Countries such as Costa Rica have also imposed their own set of insurance requirements for travelers, prompting insurance providers to adjust protections to meet these criteria.
Better insurance often translates to a higher price tag; InsureMyTrip estimates that travelers typically spend 4%-10% of the trip cost in insurance, but if they want the add-on protections, they should expect to pay toward the higher end of that range, Kenoian said.
Durazo also anticipated that insurance premiums may rise given the higher cost to carriers to cover what has become a large volume of claims since COVID-19 hit.
“We and others in [the] industry are working hard to develop products that balance consumer needs and value with affordability and financial prudence so that we can responsibly meet market demand,” he said in an email.
Meehan was hopeful but still uncertain what the fall would bring in terms of the status of the pandemic. It would be disappointing to delay his excursion again come October, but at least his concern isn’t the money he might lose.
“Because I have the insurance, I can always just rebook it again if I have to,” he said.
Nancy Lavin is a PBN staff writer. Contact her at Lavin@PBN.com.