UK Insurers To See A Surge In Travel Insurance Policy Demand Post 31 Dec 2020

Summary

• European Health Insurance Card (EHIC) which covers health insurance needs for travellers of all EU members citizens when they travel within the EU, will expire for British citizens on 31 Dec 2020
• Cost of travel insurance is expected to rise beginning January 2021, for both holiday and business flyers to Europe
• For insurance companies, the risk of payouts will remain high until the pandemic subsides

British travelers are in for an ordeal from next year 2021 when they travel to other EU countries after their European Health Insurance Card (EHIC - formerly E111) expire on 31 December 2020. The cost and convenience of travel that British citizens were used to till now will now be replaced by a slightly more cumbersome system that they had experienced while flying to non-EU countries. While this may not deter holiday-goers from flying to Europe, but they definitely should be ready to shell out more money for the same service. Moreover, due to the different level of health threat perception for different countries post COVID- 19, British insurers might charge variable premium rates, depending on the prevalent rate of infection. Overall, most insurers are expected to jack up their premium.

Impact on British travelers

The cost of travel insurance will increase for everyone as an after-effect of the ongoing coronavirus pandemic. The flu infections are still there, and might see another flare-up once the winter season arrives across the European continent. Therefore, the British travelers, heading especially towards seaside resorts of southern Europe and the Mediterranean will be at a greater risk of not only catching the virus, but will also be viewed with suspicion of bringing the infections back home. Travelling during these colder times will certainly be marred by the heightened risk of getting sick and requiring hospitalization while in a foreign country.

It is pertinent to note that according to the new travel measures, applicable from 10 July 2020, the United Kingdom has signed air-bridge agreements with as many as fifty-nine countries including across Europe and in long-haul countries like Japan, Australia, and New Zealand where travellers will not be subject to compulsory 14-day quarantine requirements. This move is expected to raise the demand for air travel to and from Britain.

For British business and holiday travelers, of course, there is no other choice but to bear the increased cost of travel insurance as well as sustain the additional risk infection to protect their interests abroad and receive a quality treatment which may not be available at affordable costs otherwise. EHIC only covers certain specified medical costs, and does not include the cost to get you back home.

The pandemic situation which is not expected to improve until at least a suitable vaccine is found, and most British citizens promptly receive protective shots, will give insurance companies enough reason to charge a high rate of premium for all who fly abroad.

Impact on Insurance companies

For insurance companies, providing travel-related insurance can be a very tricky affair, during the pandemic times. While the increased risk allows them to charge more premium, the risk for payout is also very high in case a traveler gets sick or in case his trip gets cancelled. In the recent past, British insurers had to roll-out massive payouts, as a result of the shutdown of global travel due to ensuing lockdowns across most countries during March 2020. This was the first phase of a major spread of the coronavirus pandemic across the whole world, including Europe. Hence, the financial position of most of insurance firms in the UK is anyways far from comfortable. They have already seen a surge in insurance claims in this regard. Hence, the British insurers who are providing travel insurance to people going to the Europe countries during these times would be doing so at great risk.

Impact on business travel

As we know, the complexity of obtaining the travel insurance for Europe is going to increase. With a slight rise in insurance premium cost, the total cost of doing business between the UK and the EU is also expected to rise accordingly. Business Executives who need to travel frequently could see their operations costs going up overtime. Both the sides are currently engaged in trade negotiations to protect the business interests. After 31 December 2020, EU common tariff regime comes to an end, and Britain fears that a no-deal Brexit will be harmful for the growth of its economy. Nevertheless, currently, there are no proposals to extend the EHIC cover for British citizens beyond that date.

Conclusion

The British government has launched an advertising campaign to advise and educate people to brace up for the time when the EU regulations cease to apply in the UK. As part of this new campaign titles "Let's Get Going", travelers planning to fly to Europe from 1 January 2021 are advised to take an extra travel insurance cover. Further, the people planning to travel with their pets are advised to consult their vets four months prior to the date of travel. Business travellers are also being advised to firm up their complete paperwork and passport in addition to the insurance so that they face less hassle while flying to the EU countries.

International travel from Britain was allowed from June 2020. Since then, the UK travel and tour operators have seen a renewed interest in travel enquiries as well as bookings across Europe, especially for holidays, as the summer season is going on. Whether it is the agony of being locked-up in their houses for too long or tours that had been pre-planned, Britishers certainly seem to be determined to get the better of the pandemic. By the time their EHIC cards expire at the end of December 2020, some clarity would have emerged as to where the country stands with respect to the manufacturing and public access of a Covid-19 vaccine. Thus, the cost of travel insurance is expected to remain high until the threat of the pandemic subsides.