Travellers face double-digit rises in their insurance premiums in the new year, with insurers citing rising medical and fraud costs for the increases.
Axa, the country’s largest insurer, is imposing rises on its customers in time for the winter holiday season, with its competitors likely to follow suit in coming months.
“After a difficult year for insurers with the ash cloud, strikes and airline failures, the signs are there that the cost of travel insurance could increase going into 2011,” says Bob Atkinson, travel insurance expert at moneysupermarket.com.
“Some of the single premium policies have already increased in price.”
Axa has not specified which policies will be subjected to the rises but said the increases would reflect its own rising bill for fraud and medical costs.
“In 2009, the number of overseas holidays fell by 15 per cent and travel insurance premiums reduced by about 9 per cent. The volume of claims also reduced – but the cost of claims continued to increase,” says Mike Keating, managing director of personal lines intermediary with Axa.
“For example, medical costs have increased by about 13 per cent and consumers generally have no idea what the actual cost of their treatment may be – something as simple as an ear infection may well cost about £300.00. This reinforces the importance of the disclosure of pre existing conditions and a growing need for screening in certain circumstances, especially amongst older travellers”.
But concern over rate revisions prompted a warning for consumers not to turn too quickly to the “free” policies frequently provided with a bank account or credit card, as a cheaper alternative to stand alone cover.
“We would encourage anyone who has a pre-existing medical condition to check the wording of the “free” travel insurance policy they receive with a bank account or credit card very carefully,” says Fiona Macrae, operations director of travel insurance specialist Insurancewith.com
“You need to make sure you are actually covered for pre-existing medical conditions. Some of these policies may offer to extend cover for pre-existing medical conditions provided you declare them, but the majority will not cover pre-existing medical conditions at all, especially more serious conditions like cancer.”
Customers will be given the option to include pre-existing medical conditions, subject to an additional premium. Winter sports, weddings, golf trips and business trips can also be added.
While these benefit revisions made stand alone products more competitive consumers were advised not to buy on price alone but to find a policy that best suited their needs.
In recent weeks, many insurers have introduced new benefits to their policies to make them more competitive.
HSBC & its subsidiary, First Direct, made airspace closure cover a standard feature of all their travel insurance policies from December 1.
This follows the two banks’ decision to allow claims from travel insurance customers affected by April’s volcanic ash cloud, which was in contrast to the majority of insurers.
The policy improvements will enable new and existing customers to claim on their insurance if they have to cancel their trip or are forced to remain abroad due to airspace, airport or even port closure such as this week’s snow related closures at Gatwick and Edinburgh airports.
Barclays has also enhanced its FirstAssist products with improved age eligibility terms, providing cover up to 74 on annual policies and 79 on single-trip policies.
With insurers making frequent changes to the mix of their cover, consumers were urged to shop around for the most suitable policy.
“It is vital that you understand the levels of cover on offer and what you are getting for your money,” says Atkinson of Moneysupermarket.com.
“Annual policies tend to provide great levels of cover, however this may be reflected in the price you pay.”
Atkinson says if you are taking two or more trips abroad, with one of those being long haul, then annual is better value by far.
“Plus it means you always have cover for when choosing to take last minute trips, from city breaks to family weekends away,” he says.
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