Just when travel restrictions were finally easing up and travelers began rejoicing, Omicron crashed the party. News of the Covid variant prompted border closures, new travel warnings and quarantines, indicating that the pandemic will continue to change the way we travel for some time to come.
Fortunately, many of the changes we can expect to see in the travel insurance industry this year—and beyond—are aimed at easing pandemic travel woes.
Since the pandemic started, travelers have been buying more protection for trip cancellations, and the industry is addressing coverage for Covid-related issues and moving toward more flexibility and transparency.
Many travelers are eager to book voyages for 2022, and they’re adding insurance to their plans. Travel insurance sales increased 53% in the days right after news of the Omicron variant, according to Squaremouth, a travel insurance comparison provider.
Here are some of the travel insurance trends you can expect to see in 2022.
Trip Cancellation Insurance Will Continue to Gain Steam
Trip cancellation insurance reimburses you for prepaid, non-refundable deposits if you cancel for a reason that’s listed in your policy, such as an illness or family emergency.
Trip cancellation insurance has always been a popular component of travel insurance. It has been part of 80% to 90% of travel insurance policies, according to Squaremouth.
As the pandemic continues to affect travel, this trend shows no sign of slowing down. Sales of travel insurance plans with trip cancellation coverage increased 255% year-over-year, says Squaremouth.
“Cancel for Any Reason” Coverage Will Maintain Momentum
“Cancel for any reason” (CFAR) insurance is an upgrade available for some policies that expands your ability to make a trip cancellation claim. If you have CFAR coverage, you can cancel for any reason not listed in the base policy and still get some reimbursement for your lost deposits—often 75%.
CFAR is a superior coverage to have during uncertain travel times because it can apply to situations that aren’t typically covered by a base travel insurance policy. For example, you could make a CFAR claim because of a border closure or because you don’t like your destination’s Covid testing or quarantine requirements.
“Cancel for any reason” coverage-built momentum during the pandemic and remains popular among travelers. Sales of this coverage spiked 147% from 2020 and 2021, according to Squaremouth.
Covid Coverage Will Become More Common
With a couple years of the pandemic under their belts, many travel insurance companies are now including Covid-related coverage as part of standard travel medical insurance and trip cancellation benefits.
“The majority of providers do now cover Covid under travel medical expenses and cancellation, looking at it like any other illness in most cases,” says Megan Moncrief, spokesperson for Squaremouth.
Travel medical insurance pays for the costs of an ambulance, medical treatment, medicine and more if you become ill or injured during your trip. There is a wide variety of coverage levels available, with some policies providing up to $500,000 in medical coverage per person.
If Covid coverage is important to you, make sure to verify that your policy includes it under trip cancellation and medical benefits.
Trip Delay Benefits Becoming Priority
While trip cancellation remains a top concern among travelers, trip delay benefits are poised to gain in popularity as concerns mount over new variants and quarantines, says Moncrief.
“With variants coming into play, concern about contracting the virus and being forced into quarantine while on a trip is now starting to take the lead over concerns about canceling,” says Moncrief. “We expect in 2022 that interest in trip delay coverage will increase.”
Travel delay insurance can compensate you for meals, an extended hotel stay and other extra costs if you have to quarantine while on your trip, under certain conditions: You must test positive for Covid and you must have a plan that covers Covid-related expenses. Benefits can generally be extended for seven days beyond your return date if you’re forced to quarantine at your destination longer than planned.
Travel insurance generally does not pay out if you don’t have Covid but have to do a mandatory quarantine somewhere.
More Travel Insurance Policy Flexibility
Some travel insurance companies will now accommodate customer requests for changes to trip dates on policies. This allows you to postpone the trip—and your travel insurance coverage—without canceling and rebuying the insurance.
Additionally, Moncrief says, many travel insurance companies are still willing to waive penalties for canceled or changed trips, so you may be able to recoup trip expenses that would have been lost otherwise.
More Benefit Options on Deck
To better meet the needs of travelers during the pandemic, travel insurance companies are bolstering certain benefits, which is likely to continue.
For example, some countries require that visitors have a certain minimum amount of travel insurance coverage. Costa Rica, one of the most popular destinations over the past year, mandates that unvaccinated visitors have $50,000 in medical expense insurance and $2,000 in trip delay benefits to pay for quarantine-related lodging.
Many of the travel insurance companies that didn’t offer these amounts of coverage revised their plans to match the required limits, says Moncrief.
“I anticipate we’ll continue to see that type of response in 2022 as long as these types of mandates are in place,” she says. “We may even see trip delay benefits be extended from seven to 10 days after a policy end date.”
Benefits for Emerging Pandemic-Related Issues
As new pandemic travel concerns crop up, the travel insurance industry appears to be responding.
For instance, some insurers are considering adding coverage for border closures and travel warnings in the wake of Omicron, says Moncrief, although it will take time to get approval in each state and work out the pricing details.
“It’s like terrorism. No policy had [terrorism coverage] before 9/11 and now it’s specifically listed and covered in most cancellation policies,” she says.
Trips Abroad Are Popular Despite New Entry Rules
It’s becoming “normal” for travelers to have to show some combination of proof of vaccination and a negative test result or proof or recovery from Covid when entering other countries and then upon returning to the U.S.
In January 2021, The Centers for Disease Control issued a new rule requiring all international air passengers arriving in the U.S. to get tested for Covid no more than three days before their departure. (It’s recently been changed to one day before.) You must show a negative result, or proof that you recovered from Covid in the past 90 days, before boarding.
Despite the pandemic and various country-entry requirements, more than 80% of bookings in 2021 were for international destinations, according to Squaremouth.
European destinations, however, are not nearing the popularity they had pre-pandemic, says Moncrief. “Even with the borders opening, I think people are still in the ‘wait-and-see’ mode,” she says. “And the Caribbean and Mexico are still more popular than they were before the pandemic.”
Younger Travelers Lead the Pack
Senior travelers are still sticking close to home, as younger travelers brave Covid travel turbulence.
Before the pandemic, most travel insurance was purchased by people over age 50. That’s changing. Now many travel insurance policies are bought by people under age 50, according to Squaremouth.
“Older people still aren’t comfortable with the potential risk of traveling right now, and younger people are more inclined to go,” says Moncrief. “We expect the trend of younger people, millennial, Generation X and baby boomers all comprising similar market share to continue in 2022.”
Beyond 2022: Policy Language to be Clarified
Some travel insurance companies are likely to begin revising the language in their policies to better reflect the new reality of living—and traveling—in a pandemic world.
A policy may have certain travel insurance benefits that are applicable to Covid, such as travel medical insurance, while others are not. But it’s not always spelled out.
Travel insurance companies have added information around Covid-related issues on their websites to bridge the information gap.
Adding explicit language to policies for Covid-related issues will take some time because state insurance departments must approve changes, but Moncrief believes insurers in 2022 will make progress in clarifying the terms of what is and isn’t covered.
Source: Forbes
