The Covid pandemic “has raised concerns” over insurance cover for consumers and travel businesses, the Air Travel Insolvency Advisory Committee argues.
It cites the failure by some firms to pay full refunds when consumers cancel trips due to government advice and warns of increased risk of insolvency if suitable insurance is not available as travel resumes.
The Atipac report, published in July, notes travel insurance policies refer to Foreign Office advice but traffic light guidance comes from the Department for Transport and advice on school trips from the Department for Education.
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When the Foreign Office warns against travel, consumers “naturally seek to rebook or cancel . . . however, some businesses have refused to provide refunds on the basis that flights could still go ahead”, it said.
The report notes some committee members “feel the insurance industry took a step back from paying out on policies”, leaving businesses “exposed to the full range of costs” associated with refunds.
It warns of “a higher risk of insolvency” due to “insufficient availability of suitable insurance products for businesses” as international travel restarts, stating: “These problems . . . make it harder for the travel industry to protect itself against the risks created by its unavoidable legal obligations to consumers.”