Refund credit notes (RCNs) have been vital in enabling travel businesses to survive despite unprecedented volumes of cancellations due to Covid.

But insurance underwriters view outstanding RCNs as outstanding refunds rather than forward bookings, according to Chris Photi, head of travel and leisure at White Hart Associates.

Photi told the Travel Weekly Future of Travel summit: “Insurance underwriters’ take on refund credit notes is that you will have to refund everybody.

“They ask what your refund credit note position is and say, ‘We’re going to assume you have to pay all that cash’. They’re refusing to recognise the point of a refund credit note is to allow the customer to remain protected and come back and say, ‘I’d like an Easter holiday in 2021’ and use the credit note to book.”

John de Vial, Abta director of membership and financial services, told the summit the continuing failure of airlines to process refunds was “one of the reasons the government has given the flexibility it has with refund credit notes, acknowledging that Abta and the CAA have been protecting them”.

Stephen Mason, senior counsel at Travlaw, said: “I wonder whether RCNs could become a permanent feature of the landscape, could have statutory backing by being built into the Package Travel Regulations. Some governments in the EU did that. Our government was reluctant to, but there might be an opportunity to do that.”