Today, Southern Cross Travel Insurance (SCTI) has revealed the true impact the Omicron variant has had on its business since the new year. For many Australians, COVID-19 is something we’re all learning to put behind us, as life is beginning to return to normal, but for the travel insurance industry, it is still very much alive and going strong.
The Omicron variant caused mass chaos and disruption over the festive and summer periods as the wave peaked in Australia, causing many Australian travellers to cancel trips or change their itineraries whilst already overseas visiting friends and family. Since then, there has been a steady flow of COVID-19 claims to travel insurer, Southern Cross Travel Insurance.
Jo McCauley, CEO at Southern Cross Travel Insurance discloses that since the start of the year COVID-19 claims have made up 33 per cent of the total claims received across its TravelCare (international) and Domestic travel insurance products in Australia. SCTI has paid 82 per cent of COVID-19 claims made by customers between 1 January and 31 May, totalling $630,690.
The remaining 18% of claims are either still being reviewed, have been declined, were under the policy excess or could not be finalised as the customer was unable to provide sufficient documents.
“We launched COVID cover in August 2021 because we knew that this was really important for customers, especially in this new environment where peace of mind is paramount. Our research shows that two-thirds (60%) of Australian travellers now rank a level of COVID-19 cover in their top three most important features of travel insurance.
“However, it’s fair to say that the Omicron variant presented a substantial operational challenge to our business, especially at the start of the year, as our contact centre and claims teams received a significant volume of enquiries and claims from customers impacted by Omicron over the summer break. Unlike other travel insurers, we didn’t pause the sale of policies in Australia. I’m very proud of how we’ve navigated this challenging period and I hope our customers are happy with their experience too.”
The majority of COVID-19 claims received by SCTI were for medical care and travel disruptions that occurred when customers contracted COVID-19 while on their holiday. For SCTI’s international travel insurance product, TravelCare Australia, 81 per cent of the claims received to date are from people who had been diagnosed with COVID-19 while overseas. Similarly, 52 per cent of claims for SCTI’s Domestic travel insurance are from people who had been diagnosed with COVID-19 during their journey.
SCTI customer and Sydney-based traveller, Cristina, took out a travel insurance policy on 8 December for a trip to Spain on 17 December. Cristina contracted COVID-19 while she was in Spain and had to spend 20 days in isolation before flying home on 29 January. SCTI paid her claim in full and covered her extra accommodation, flight changes and several RAT tests.
McCauley warns that it’s important to note that generally, travel insurance won’t cover COVID-19 tests, such as a PCR, where you are required to be tested in order to travel.
“This is because testing is part of your original travel arrangements, so the cover won’t apply. However, you would be covered if you are diagnosed with COVID-19 while you’re overseas and you need to take a COVID-19 test, such as a RAT as part of your rescheduled return flight.”
SCTI has also revealed the top three destinations which have experienced the largest number of COVID-19-related claims from SCTI customers. Taking out the number one spot is the United States, followed by Australia due to domestic traveller claims and third is the United Kingdom, which is a key expat market. Not far behind is family favourite Fiji, followed by India and Thailand.
Although the majority (82%) of COVID-19 claims have been covered by SCTI, 10% of claims are still being reviewed, 5% were under the policy excess or could not be finalised as the customer was unable to provide sufficient documents, and there was still a small portion of claims (3%) which were declined. The most common reasons for the declinature of claims included:
- Being diagnosed with COVID-19 while travelling to a destination the Department of Foreign Affairs and Trade (DFAT) has classified as a level 3 travel advisory due to the risks of COVID-19. If travellers choose to visit a destination or a region that has a level 3 or 4 travel advisory in place before they travel to the area, it is unlikely that travel insurance policies will cover any event that is related to the reason why that advisory was put in effect.
- The insured customer wasn’t diagnosed with COVID-19 themselves and was just a close contact which is not covered under the policy.
- The insured party decided to cut short their journey after catching COVID-19 even though the remainder of the journey was not affected by COVID-19. Southern Cross Travel Insurance’s COVID-19 cover only covers travel changes and cancellations caused as a direct result of contracting COVID-19. It doesn’t cover changes to the journey based on personal preference or peace of mind.
Despite it being an incredibly challenging time for the travel industry, McCauley acknowledges that there have been some positives to emerge from the pandemic. “We’re certainly starting to see our customers engage a lot more with their travel insurance policy.”
“We’re experiencing customers contacting us a lot more than they used to, asking us a lot more detailed and hypothetical questions about what would occur in a certain situation. It’s fantastic to see that customers are really engaging with the policy they’re buying because it shows us that they value travel insurance and they’re really taking the time to understand how their travel insurance will cover them. I’m really hoping that this is a trend that we’ll see continue.”
Edited by: Matthew Thomas
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