Photo: The Blue Diamond Gallery
While images of chaos and carnage have filled cable television’s 24-hour news cycle the past two weeks, most travelers appear unfazed by the video footage and “red alerts,” continuing to book international travel—and sharing only a practical interest in travel insurance.
“Most of my clients usually take travel insurance,” said Deanna Tracey, president and owner of CDT Travel in Newburgh, NY. “For us, I haven’t seen a decrease or increase [in the past two weeks]. I’ve had a few calls from clients concerned. Some tour companies are allowing them to move their money to another trip. But so far, we haven’t had anybody cancel.”
Tracey’s sentiments were shared by other agents and insurance executives, who believe that Americans have become more practical about the likelihood of their falling prey to a terrorist attack.
“We’ve seen an increase in insurance bookings overall in the past decade, so we didn’t notice an increase after Lahore and Brussels—but I think that’s because travelers are already hip to travel insurance,” said Casey Carr, general manager at Sharon Carr Travel in Dallas.
At the end of December last year, following the November 13 Paris terrorist attacks, Squaremouth, an online company that compares travel insurance products, said visitors to its site rose 38%, purchasing 17% more policies versus the similar period the previous year. There also was a 53% increase in “terrorism coverage” searches.
The company hasn’t seen a similar reaction to the Brussels and Lahore bombings. “In terms of overall sales, we have not seen a significant change following the attacks,” said Rachael Taft, Squaremouth’s content manager.
But the percentage of customers using Squaremouth’s “Terrorism” search filter has more than doubled compared to the average for the past year. “We have seen an increase in calls and questions from customers asking about terrorism. This includes customers who already have policies and want to make sure they understand their coverage, as well as travelers looking to buy a new policy with terrorism coverage,” Taft said.
But Allianz Global Assistance has seen nearly a 10% increase in sales of travel insurance to leisure travelers over the past year, said spokesperson Daniel Durazo.
Allianz received more than 200 calls from travelers concerned about the terrorist attack in Brussels, 100 of which indicated they planned to cancel their trip and file a travel insurance claim.
Read the fine print
Carr said consumers frequently don’t understand what they are covered for in the event of a terrorist event. His agents advise travelers to look at their policy terms and conditions. “Terrorism coverage exists, but read the covered situations and just be aware,” he tells clients.
Squaremouth notes how travel insurance providers generally require the U.S. State Department declare an act of terrorism for coverage to be initiated. The terrorist event must also occur in or near a city on the traveler’s itinerary within a certain amount of days of the traveler’s departure date, typically 7-30 days.
Since standard policies do not cover cancelling trips due to fear, most agents said they recommend travelers purchase Cancel for Any Reason (CFAR) options. For example, TravelGuard says travelers who purchase CFAR coverage could be entitled to a percentage of their loss, depending on the level of coverage purchased.
A CFAR upgrade typically increases the cost of the policy by about 40% and reimburses the traveler up to 75% of the trip cost. Usually the upgrade is only available within 14-30 days of the traveler’s initial booking or deposit date.
Note also that there are a few policies that will not provide terrorism coverage for an act of terrorism if a previous terrorist event has occurred in the same city within the past 30-90 days.
For those expressing concerns, “We try to educate our clients about statistics,” Carr said. “How likely are you to be involved in a terrorism event during your travels?’ Once people grasp the astronomical odds against it, that goes a long way to alleviating fears.”
Zika takes a back seat
Less pressing are concerns regarding the Zika virus. “Zika has not had a major impact on our business with regards to cancellations or people being too scared to travel to Latin American countries,” Carr said.
“To be honest, Zika has faded somewhat in the public consciousness,” said Megan Freedman, Executive Director of the US Travel Insurance Association, “but there may be a resurgence in interest as we get closer to the Summer Games.”
Under most insurance plans, if travelers contract Zika while traveling, they are covered for emergency care, medical evacuation and trip interruption benefits. Currently, most insurance providers won’t reimburse travelers if they cancel a trip to an affected country because of Zika concerns.
Standard travel insurance policies do not cover trip cancellation due to a CDC alert or a disease outbreak, such as the Zika virus, at the traveler’s destination, Squaremouth’s Taft noted. Travelers with the CAFR upgrade would be covered to cancel their trip for reasons not covered by a standard policy, such as an elevated CDC travel alert.
Allianz, meanwhile, offers several products for claims related to Zika, Durazo said. If a customer’s travel insurance policy includes normal pregnancy as a “covered reason” for trip cancellation, customers who become pregnant after the effective date of their policy may be eligible to receive reimbursement for their pre-paid, non-refundable travel deposits if they choose to cancel their trip, Durazo said.
He also noted that Brazil is home to one of Allianz Global Assistance’s largest business units. "We have more 1,000 employees on the ground there" should a customer need help while attending the Olympics.