A number of travel insurance providers currently offer policies that will pay out in the event of trip cancellation for COVID-19-related reasons. However, one key player in the market has discontinued this offering, and more may follow suit to limit cover given the recent rise in cases and resulting lockdowns caused by COVID-19.
According to GlobalData’s 2019 UK Insurance Consumer Survey, Nationwide is the most popular travel insurance provider, with 8.1% of travel insurance policies sold through the building society. Its FlexPlus account currently offers account holders cancellation cover if lockdowns or other rules change after a holiday booking has been made. However, from the beginning of 2021, the policy will no longer pay out if the Foreign Office changes travel advice for the destination country or if a policyholder’s accommodation goes into lockdown.
The two other largest players, Aviva (7.5% market share in 2019) and InsureandGo (5.5% market share), currently do not offer the same level of cover as Nationwide does. In fact, Aviva still has not resumed the sale of its travel insurance policies, having temporarily discontinued its travel insurance products at the onset of the pandemic. This sets Nationwide’s offering apart from other large players and makes it very attractive for customers seeking standalone travel insurance products to bring certainty while traveling during a very uncertain period.
However, the situation has become too risky once more. With new lockdown restrictions being enforced across many European countries like the UK, France, Germany, and Spain amid a wave of new coronaviruses cases, insurers will be expecting claims to flow in once again.
While Nationwide’s offering will have helped it gain market share from its competitors, the adverse effects of COVID-19 on the travel insurance industry have been all too apparent. Amid growing risk, it will be down to smaller, specialist providers with fewer customers to offer these services at a premium price, as they will have a fewer number of customers and will be insulated from claims arising in other lines of business.