Insurers who paid out for large group-travel cancellations early in the Covid crisis are seeking money back from travel firms in what lawyers call subrogated claims.
Law firm Travlaw reports travel organisers of school and group trips are receiving a growing number of claims where an insurance company paid a claim then “stepped into the shoes of the customer” to pursue a refund from the travel company.
Travlaw associate Nick Parkinson said: “I call them boomerang claims. We see a tranche of clients whose customers went to their insurer in March and April and now have the insurer contacting them.”
He advised companies handle the claims “the same as when a customer asks for a refund”, insisting: “It may be no refund is due. Maybe the customer cancelled nine months out and it would be ‘disinclination to travel’ [by the customer]. Say it’s a cancellation four weeks before departure, there was still a ‘flicker of hope’ [the trip might go ahead].”
Parkinson noted “there is no binding case law” on when a consumer’s right to cancel and receive a full refund kicks in and “no guidance from the government or the EU”.
He said: “The insurer is racking up claims and may think they are worth pursuing. We see a pattern with school trips and the numbers adding up, and you have law firms steering the insurance companies.”
Parkinson told Travel Weekly: “Two or three insurers are hotter on this than others. We’re not seeing isolated claims for £2,000, but claims for large groups and school trips. The insurers step into the shoes of the consumer where the insurer has paid out.”
But he insisted: “If you could defend the claim against the customer, you can defend the claim against the insurer. The same arguments apply.”
Parkinson warned the law firms handling the insurers’ claims may also seek legal costs. He said: “You should not have to pay legal costs. There are good arguments to say they are not entitled to costs.”