COVID-19 travel insurance becoming a staple vacation item

COVID-19 insurance policies are increasingly joining passports and sunscreen as basic vacation items, creating opportunities for insurers as more countries require mandatory coverage in the event of visitors becoming ill with the coronavirus.

Airline reservations are increasing in some regions, raising cautious hopes of a summer revival of traffic, but also heightening fears among tourist destinations of being hit by bills if tourists are trapped by the virus.

More than a dozen countries, from Aruba to Thailand, require COVID-19 coverage for visitors, with Jordan being the last to consider such protections, organizers of an emergency services plan told Reuters.

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The market for all types of COVID-19 travel coverage is estimated to be between $ 30 billion and $ 40 billion a year, according to travel insurance consultant Robyn Ingle, with underwriting protection companies like AXA and AIG .

But an increase in demand for COVID-19 coverage also means that insurers may be at risk of large payments if another wave of infections leads to a large number of cancellations or tourists become ill.

“Travel insurance and protection services are taking off at the pace of travel as they resume,” said Dan Richards, chief executive of Global Rescue, a travel risk and crisis management company.

COVID-19 insurance benefits generally cover treatment of up to $ 100,000 and may include coronavirus testing costs and services such as evacuation or local burial or cremation. These benefits, introduced by insurers in mid-2020, are sold as supplements or as separate policies with sickness or quarantine coverage.

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Jeremy Murchland, president of Indiana-based travel insurance company Seven Corners, said travelers are now “more likely to insure their travels” as more countries require COVID-19 coverage.

A travel insurance plan that includes travel protection, medical expenses coverage for COVID-19 and protection for luggage and personal effects typically costs 4% to 8% of the dollar value of the trip, said Murchland.

Although the pandemic has affected travel, demand for coverage has created opportunities for the hard-hit insurance industry and a niche to develop new products, the companies said.

For example, in June, Seven Corners introduced an optional medical travel plan with coverage for expenses with coronavirus, said Murchland. At the end of the year, the product with coronavirus coverage generated around 80% of total sales of medical travel plans.

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Seven Corners also saw a 20% increase in travelers who purchased “cancellation for any reason” policies at high prices in 2020. The policies cover cancellation costs related to the virus.

Some countries impose mandatory travel insurance on incoming visitors – either by including it in entry or visa fees or requiring proof of coverage, said insurer World Nomads.

Jordan is considering whether to require a mandatory flat fee for visitors as part of a Global Rescue and Global Travel and Tourism Resilience Council program, said council co-chairman Taleb Rifai. The program, which costs up to $ 100 per person, covers certain disasters and illnesses like COVID-19.

The Jordanian Tourism Bureau was not available for comment.

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It is not clear how the demand for coverage will evolve as many more people are vaccinated against the coronavirus with vaccines.

Frank Comito, special adviser to the Caribbean Hotel and Tourism Association, said some budget travelers have complained about mandatory coverage. And some countries may discontinue or relax the requirement to “move away from the pandemic”.

Rifai, a former secretary general of the UN World Tourism Organization, said he hoped countries would continue to demand coverage, as vaccines “will take years” to be deployed globally.