Property and casualty insurance agents may not sell a lot of travel insurance. However, as anyone who has ever attempted to book airfare online knows, most carriers will not let you proceed with the booking process until you accept or reject their travel insurance offering.
Independent agents who act as trusted advisors to their insureds may wish to increase their knowledge of travel insurance by reading a recent report on travel insurance.
In August, Massachusetts Senator Edward J. Markey released a report on the travel insurance industry, “Flyer Beware: Is Travel Insurance Worth It?” The report focused on travel insurance sales by airlines and online travel agencies
The report reviewed nine airlines and seven online travel agency travel insurance sales
From March through May 2018, Senator Markey’s office conducted an investigation to identify the kinds of travel insurance that airlines and online travel agencies are offering, how the insurance is advertised, and the extent of the coverage provided. The investigation collected and evaluated detailed information on the travel insurance marketing and sales practices of nine major airlines that fly both domestically and internationally:
- Sun Country; and
Also, Senator Markey’s office investigated seven frequently visited online travel agencies that marketed travel insurance: CheapOair, CheapTickets, Expedia, Hotwire, Orbitz, Priceline, and Travelocity),
The report had five major findings
The major findings of the Senator’s travel insurance report were:
- Travelers spent $2.8 billion on travel protection in 2016, 2.5 times more than they spent in 2004, with airlines and online travel agencies earning an undisclosed fee on every policy sold.
- The airline and online travel agency ticketing processes encourage and pressure travelers to buy travel insurance, with fifteen of the sixteen companies evaluated not allowing travelers to purchase airplane tickets without buying or declining to buy recommended travel insurance.
- Airline and online travel agency websites offer only bare-bones travel insurance plans with little coverage and a long list of exclusions that leave customers stranded.
- The airline and online travel agency websites commonly overstate policies’ flexibility and bury the details of coverage limitations in the fine
- Only two travel insurance companies provide 93 percent of the policies offered on airline and online travel agency websites.
Some airlines and online travel agencies pushing policies with little coverage
“The only thing skimpier than airplane legroom are these travel insurance plans,” said Senator Markey in releasing his report on airline sold travel insurance. “Consumers are pressured to buy plans that promise extensive or even total coverage, but in reality offer very little, leaving them without the security they thought they bought and oftentimes without their money. These plans are just another way for airlines to charge passengers more to get less.”
Total coverage except for exclusions excluding any coverage
Senator Markey’s report backed up his statements that the insurance plans offered by the airlines and online travel agencies often failed to provide the advertised protection.
For example, the Senator’s study found that some of the online travel agencies websites including CheapTickets, Expedia, Travelocity, Hotwire, and Orbitz called their international travel insurance offering the “Total Protection Plan.”
The Senator’s examination showed “Total Protection” was far less than “Total” since the policy, excluded reimbursement, among other reasons for:
- travel arrangements canceled by an airline, cruise line or tour operator;
- changes in plans by the Insured, a family member, or traveling companion, for any reason;
- failure of any tour operator, common carrier, person or agency to provide the bargained-for travel arrangements.
Based on those exclusions, most of the reimbursements a traveler would view as covered b based on the policy’s title such as: If an airline cancels a flight; if unforeseen circumstances require travelers to change plans; or if a tour operator shuts down unexpectedly, would likely be uncovered. Thus, a policyholder who had their travel plans canceled for one of these reasons would have no reimbursement from their “Total Protection Plan.”
Agency Checklists recommends the full report from Senator Markey
The full report from Senator Markey is only twelve pages long, with ten tables and figures. Although short, the report offers an excellent overview of the problems with this niche coverage. It also offers a sobering view for anyone who has while booking a flight had the temptation to answer “Yes” to an airline’s pitch to “Protect your flight.”
A copy of Senator Markey’s report “Flyer Beware: Is Travel Insurance Worth It?” can be found HERE.