AXA launches new travel insurance product
As 7 million UK holidaymakers prepare to book their main summer holidays in the coming weeks, AXA believes that up to nine in ten of these could end up with a holiday that is uninsured, under insured or wrongly insured leaving consumers facing a bill of upwards of £130m.
AXA, the largest travel insurer in the UK, believes consumer ignorance and the industry's failure to address this with relevant and understandable products has led to these levels of under insurance. AXA Insurance has spent the last six months re-developing its Direct travel product and, importantly, the sales process behind it.
The volcanic ash cloud, swine flu and airline strikes of the last couple of years highlighted some of the consumer and industry issues around travel insurance. 19% of holidaymakers say they are now more likely to consider buying travel insurance than they were this time last year. Yet when push comes to shove, if budgets are tight, consumers say that travel insurance is more likely to bite the dust than money for holiday or nights out. Another major incident this year could, however, cost uninsured holidaymakers a further £75m.
The new AXA product, which is available only directly from AXA Insurance and not through any aggregator or third party, aims to provide the most comprehensive, flexible and relevant cover on the market including:
three levels of cover: basic, essential and premier for single trip (up to 365 days) or annual multi-trip
new travel disruption cover for ‘independent travellers' (holidaymakers who book their own travel and accommodation rather than using a package tour) with a process designed to make sure this is not overlooked if required. This will ensure additional accommodation and travel costs are covered if unforeseen delays occur. It also covers financial failure of travel providers
online guidance to ensure other important features such as winter sports are not left out. Recent stats from AXA revealed around a million skiers could be heading to the slopes this winter with no cover[3]
four optional areas of cover - baggage, sports equipment, legal cover and travel disruption
individual age and health rated premiums rather than ‘block' premiums
online medical screening - ensuring travellers are not under-insured.
All of this can be delivered online in just a few minutes.
Roman Bryl, underwriting manager for AXA says: "Travel insurance is clearly viewed as an optional extra by many and even for those who buy it, it is often seen as just something to protect them against a lost pair of designer shades (which are excluded in the small print in many of the cheaper policies). The reality is that 65% of claims are for medical problems. The average claim cost involving a hospital stay is £1,400. Serious medical claims can cost hundreds of thousands of pounds. For the vast majority of people, footing the bill would be a complete impossibility.
"As the UK's number one travel insurer we believe it is our responsibility to lead the industry in working with consumers to provide a product that matches their needs and is delivered and sold to them in a way that they understand what they are covered for.
"Our research showed that only 15% of people were very confident they understood what travel insurance covered them for. Unless this changes, consumers will continue to suffer the traumatic and financially punishing consequences of not having the right insurance in place."
Research from the company showed the common gaps in insurance included:
nearly one in three don't buy any insurance (29%). Of those that don't, 25% say they "don't need it" and 21% say it's a "waste of money". Yet 70% of these people have less than £1000 in accessible savings should they need it
two thirds of holidaymakers (63%) will independently book their holidays rather than use tour operators. Yet only 7% of those that book independently would have bought a travel insurance policy that is specifically designed for this type of travel. Most people (73%) believe that there is either no need for a different policy (41%) or don't know (32%) whether there is. And the percentage of those with no insurance rises to nearly 40% among independent travellers
up to 35% of those who do buy insurance won't do so until just before they go away, potentially leaving themselves exposed to having no cover for issues such as airline strikes or ash clouds
40% of those that take out travel insurance already have personal possessions cover under their home insurance making that element of their travel insurance unnecessary.
and a further 10% already buy cover for sporting equipment making that an area where further insurance is not required
Other common misunderstandings:
consumers don't understand what they are covered for: nearly two thirds (62%) believed they would be covered for any delays relating to volcanoes, earthquakes or tsunamis. One in five believe they'd be covered for any adventure activities, 60% believe they'd be covered for any accidents even if they were under the influence of alcohol
excess levels for travel insurance vary enormously with some reaching several hundreds of pounds. Yet only half (54%) of those buying travel insurance check the level of their excess
10% of holidaymakers who don't buy travel insurance believe that being in possession of an EHIC will provide the cover they need whereas the reality is EHIC does not cover all medical costs overseas and does not cover repatriation home. They will also have no cover for other risks such as cancellation or lost baggage
the most important element of the cover, medical, is often overlooked with 21% putting baggage cover or cancellation/curtailment cover above medical cover.