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The Actuary The magazine of the Institute & Faculty of Actuaries

Travel insurance: What’s the worst that can happen?

Travellers are always being put under pressure or encouraged to take out insurance. According to medical travel insurance specialist, AllClear, it seems that three out of every five British holidaymakers are invalidating their travel insurance by not informing insurers of pre-existing medical conditions.

Lack of awareness of whether such minor conditions as asthma or high blood pressure need to be declared is also an issue. In the same vein, Sainsbury’s Finance issued a story warning holidaymakers to make sure they have adequate travel insurance, as it estimates that some 11.3million Britons, over a third (37%) of those who went on holiday last summer, did so without any travel insurance to cover their trip. They further estimate that those travelling without insurance have collectively faced costs of more than £57m which would otherwise have been covered by their insurer.

Sainsbury’s spokesman, Sam Marrs, describes travel insurance as something to be considered “a holiday essential”. Yet the fact that a third of Britons don’t agree says something about contrary rational decision-taking. Did the 11.3million uninsured appreciate that they faced average costs of £5 in uninsured losses? Are the financial risks of an accident or illness in France, say, little different from those in ordinary daily life home in the UK? Of course, the major risk is of an unlikely but expensive loss.

AllClear recently reported that the average cost of claims for repatriating holidaymakers taken ill while overseas is in excess of £25,000. One case, for a broken ankle, led to an 11-day stay in a hospital in Menorca and a claim of £28,000 on return to the UK. Maybe a clearer focus on the likelihood and severity of the risks involved could help to make sure that the uninsured really are choosing that rationally – and respected if that is their properly made decision.