The global travel landscape is becoming increasingly unpredictable, with flight cancellations, delays, and other disruptions on the rise. This has led to a significant shift in how both leisure travellers and businesses approach travel insurance. Since 2019, travellers worldwide have faced numerous challenges, including COVID-19, extreme weather events, volcanic eruptions, military conflicts, and technical issues that have grounded planes and stranded millions.
In the United States, ongoing air traffic controller shortages and outdated technology have compounded the problem, causing significant disruptions. For instance, in May, equipment outages, runway construction, and staffing shortages at Newark Liberty airport resulted in numerous flight cancellations, diversions, and delays. The recent escalation of conflict in the Middle East, with Israel attacking Iran, forced carriers to cancel or divert thousands of flights.
As a result, travellers are becoming more cautious and discerning about the level and type of insurance they purchase. Many standard policies come with numerous exemptions buried in the fine print, prompting more travellers to opt for higher-end insurance policies, often at increased premiums. According to industry insiders, this trend is driven by the increasingly unstable global situation.
“We’re in times that are quite unstable, so people are cancelling more frequently than previously,” said Duncan Greenfield-Turk, CEO of Global Travel Moments, a London-based luxury travel agency. Data from European insurer Allianz Partners shows that European tourists have increased their purchases of travel insurance for this summer by 3% compared to last year. The trend is even more pronounced in the U.S., where Squaremouth, the largest travel insurance marketplace, has seen a 34% year-over-year increase in purchases of ‘Cancel For Any Reason’ protection.
Businesses are also seeking specialized travel advice to mitigate risks. With changing immigration policies and visa regulations, companies are turning to advisory services to navigate these complexities. World Travel Protection, a global firm advising businesses on travel risk, has seen an uptick in demand for its services, particularly in relation to U.S. travel restrictions. CIBT, which provides non-legal visa and immigration guidance, has reported a 50% rise in inquiries from companies seeking to prepare their employees for travel to the U.S.
The travel insurance industry is responding with innovative products. One emerging trend is parametric insurance, which automatically pays compensation after a ‘trigger’ event, such as a flight delay, without the need for a claim. This type of insurance gained popularity during the COVID-19 pandemic and is now being adopted by more insurers worldwide. Spanish insurer Mapfre’s Mawdy unit found that including instant compensation increased the uptake of higher-tier travel insurance packages by 11%.
Travel destinations are also capitalizing on this trend. Marriott Bonvoy’s villa rentals and waterparks now offer parametric weather insurance at the point of booking, which automatically pays out on rainy days. Sensible Weather, a provider of such coverage, reported that their weather guarantees were added to 30% of theme park bookings and 10-15% of higher-value accommodation bookings in 2024.
The industry is evolving to make insurance more accessible and understandable. Squaremouth recently launched a new insurance product with cruise-specific benefits, including coverage for being confined on a cruise ship or missing a port of call. “Everyone is trying to make it easier for people to understand that each trip is going to have a different set of concerns,” said Suzanne Morrow, CEO of online insurance broker InsureMyTrip.
