With travel demand on the rise in the wake of easing COVID-19 restrictions, a larger percentage of Canadians are opting for overseas journeys.
The number of Canadian residents returning by air from abroad at kiosk-equipped airports totalled 901,300 in June 2022, 15 times greater than the same period last year, according to a StatsCan report.
That sudden spike in flyers has led to flight cancellations, lost luggage and choking delays at airports, which are still experiencing staff shortages and other impacts from COVID-19.
And those flight cancellations, delays and lost bags have affected the travel insurance market.
Among Canadians responding to a RatesDotCa and BNN Bloomberg survey who said they’ve had to alter travel plans due to an airline issue, 78% survey said they plan to purchase travel insurance for their next trip.
What’s more, the survey found 57% of those planning to travel by plane said they’ll purchase additional travel insurance coverage, such as trip cancellation or trip interruption. By contrast, only 34% of Canadians planning to travel by car said they’d do the same.
Travel insurance most often covers trip cancellation, trip interruption, travel delay, baggage or damage loss, medical evacuation and repatriation, rental car collision damage and legal expenses, according to several industry sources.
Overall, 46% of all trip planners (plane or car) are considering travel insurance. But intent to purchase insurance is higher for those who have postponed or redirected travel plans due to a likelihood of flight cancellations and delays.
The survey found 24% of those whose travel was interrupted said that while they normally don’t buy travel insurance, recent events have them thinking about the option.
Income levels also don’t factor in to the decision to purchase travel insurance policies, the survey noted, possibly because of the product’s relative affordability.
What this uptake in travel insurance business may mean for insurers remains somewhat up in the air, a recent commentary from credit-rating agency DBRS Morningstar noted.
“With many airlines and airports around the world facing extremely high levels of flight cancellations and delays in recent months, we expect that the travel insurance industry will experience combined ratios over 100% due to the increase in insurance losses, making this business line unprofitable for most insurance companies in 2022,” said Marcos Alvarez, senior vice president and global head of insurance at DBRS Morningstar.
Feature image by iStock.com/Craft24
