Peter Hayman, Director of specialist travel insurance provider P J Hayman comments on how changes in the current travel insurance market could impact the consumer.
“With the summer holidays now over, travel insurers are now revising and renewing their schemes. This is likely to impact consumers as a combination of currency disadvantages on claims costs and accumulated large losses have ensured that insurers are pushing up costs for scheme holders and brokers.
“For the last three years we have seen rates being driven downwards for several reasons. Comparison websites offering non-specialist cover are getting ever cheaper, brands are driving harder bargains with their insurance partners to position product offerings at prices and age limits that do not make underwriting sense. A combination of low interest rates, accumulated claims and the need to get a return on capital have meant that an otherwise pragmatic travel insurance market has become, practically overnight, almost impossible to predict. Insurers are forcing through increases that would previously have been unthinkable in a competitive market. Rate increases of 20+% are not untypical coupled with other limitations such as restrictions on age and degrees of acceptance for medical conditions.
“These changes will take some time to filter through to the public. Many will coincide with the increase in insurance premium tax on travel insurance from 17.5% to 20% on the 4th January 2011; a rate that will be 14% higher than for other types of insurance such as motor and household.
“With premiums set to rise and increasing restrictions, it is important that consumers do not seek to cut costs by neglecting to take out adequate cover. They also need to read the small print to ensure the policy they do take out does not have any harsh exclusions that could come back to haunt them later down the line.”