Wildfires and evacuations on the Greek island of Rhodes, and a heat wave sweeping much of southern Europe, have raised questions for tourists about their travel insurance coverage.
As the threat of wildfires remains high across Greece and the heat continues elsewhere at the height of the summer holiday season, here are some of the key questions and answers:
WHAT IS TRAVEL INSURANCE?
Travel insurance is “essential” to protect against the high cost of emergency medical care while abroad, according to the Association of British Insurers (ABI).
Travelers should check the exact terms with their individual insurers and tour operators.
WHAT IF YOU FALL DUE TO THE HEAT, OR YOUR COMMODITY IS AFFECTED BY WILDFIRES?
If someone gets sick from the heat while on holiday, the British insurer Aviva, for example, will cover the cost of medical care and repatriation if necessary. Aviva will also cover the cost of moving to new accommodation if a booking becomes uninhabitable due to a wildfire.
German insurer Ergo will pay for any additional costs if a traveler is unable to leave their travel destination due to a fire.
WHAT IS NOT COVERED IN TRAVEL INSURANCE?
This will not include cancellations for travelers who decide not to travel due to the heat.
WHAT ARE THE COSTS OF NATURAL CATASTROPHES TO INSURERS?
Hurricane Ian in the United States and floods in Australia helped make 2022 one of the most expensive years on record for natural disasters, according to Munich Re, which said losses totaled $120 billion.
Insurers are increasingly turning away from some markets such as Florida, which is prone to hurricanes that insurers predict will become more severe as the climate warms, and California, where wildfires are common.
ARE INSURERS RETHINKING COVERAGE DUE TO GREEK FIRES?
Ergo said such incidents have been occurring for decades, and it is “continually” assessing the risks.
“The intensity of the fires in Greece is not a reason for ERGO Travel Insurance to change the scope of benefits,” it said.
WILL THE GREEK FIRES AFFECT INSURANCE PREMIUMS AND INSURERS?
They haven’t quite yet, according to rating agency Fitch, which calls travel insurance a niche product and says it’s too early to see changes in terms and conditions.
Although price increases for policies can be expected, “the COVID-19 pandemic poses a more severe and widespread risk for travel insurance – and suppliers are not cutting capacity,” said Robert Mazzuoli, director of Fitch’s insurance group. He added that the affected region of Greece is a small part of the total market.
TRAVEL INSURANCE PRICES ARE GOING UP. HOW MUCH AND WHY?
Travel insurance premiums are up nearly 10% this year from last year in many European markets as insurers try to recover from COVID-19 losses, said Marcos Alvarez, global head of insurance credit ratings at DBRS Morningstar. He expects them to rise another 10% next year.
Many insurers are diversified, limiting their financial hit from travel. Travel insurers carve out additional coverage, such as travel interruption, and charge additional premiums for them.
HOW BIG IS THE TRAVEL INSURANCE MARKET?
Quite a bit. US residents spent $1.72 billion on travel insurance in 2020, according to the US Travel Insurance Association.
In contrast, global insurance premiums are estimated at 5.6 trillion euros ($6.20 trillion) in 2022, according to German insurer Allianz.
WHAT IS THE REACTION OF TOUR OPERATORS TO THE FIRES IN GREEK?
Tour operator TUI had 39,000 visitors to Rhodes on Sunday night. About 7,800 of those affected were taken to other hotels or shelters. On Monday, it deployed six additional planes to fly home German and British holidaymakers.
The operator is canceling flights to Rhodes in the coming days and offering free cancellation or rebooking to other TUI destinations.
WHAT ABOUT PEOPLE WHO JUST BOOK FLIGHTS?
Condor, Lufthansa’s budget airline, said it would rebook flights to Rhodes for free.
($1 = 0.9029 euros)
(Writing by Tom Sims; editing by Mark Potter)
Photo: Flames rise during a forest fire on the island of Rhodes, Greece, Saturday, July 22, 2023. (Argyris Mantikos/Eurokinissi via AP)
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