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Highlights:
- Four in ten travel insurance policies do not offer cover for flight cancellations due to strikes.
- The research by Which? comes when airports are expected to witness more flight cancellations this summer.
Air travellers in the UK have been witnessing chaos and long queues at airports due to flight cancellations. The problems are expected to increase further as British Airways staff voted in favour of a strike over wages last month, which would disrupt an already chaotic summer for travellers. Travellers struggling with frequent flight cancellations have another concern to worry about, a significant chunk of travel insurance policies do not provide cover for cancellations due to strikes, a new study has revealed.
According to the research by the consumer group Which? about 40% of travel insurance policies do not offer cover if the flight is cancelled due to strikes by the airport or airline staff.
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The group surveyed 71 providers' 199 policies as part of its annual review of travel insurance. It found that only 120 of them provided cover for cancellations due to strikes, while 78 didn't offer it at all. One policy offered it as an optional extra.
Which? highlighted that airlines are obligated to refund the passengers if the flights are cancelled, including due to strikes by their own staff. It further advised travellers to be cautious while buying travel insurance due to the expected disruption at the airports this summer. Package tour operators are also mandated by law to refund passengers for cancellations, it added.
Let us now look at some London-listed travel insurance providers and analyse their investment prospects.
Aviva Plc (LON: AV.)
Aviva is a leading financial services provider in the UK and offers several types of insurance, including travel and holiday insurance. The FTSE 100 constituent's stock has fallen by over 5% in the past month and over 24% in the past year. The company holds a market cap of £11,342.54 million, and it was at GBX 400.30, down by 1.09% at 9:05 am GMT+1 on 5 July 2022.
Direct Line Insurance Group PLC (LON: DLG)
The UK-based insurance provider was divested from the Royal Bank of Scotland's insurance division in 2012. It is a part of the mid-cap-focused FTSE 250 index and holds a market cap of £3,257.49 million at present. The company's stock price has slipped by over 13% in the past 12 months, while the year-to-date return stands at -10.97%. Its shares were trading 0.30% higher at GBX 249.14 at 8:05 am GMT+1 on 5 July 2022.
Prudential Plc (LON: PRU)
The London-headquartered financial services provider offers services in the UK, US, Africa, and Asia. It is listed on the FTSE 100 index and has a market cap of £28,001.77 million at present. Its share value has slipped by 26.81% over the past year. Investors who entered the stock five years ago for long-term results haven't received any significant benefits so far, as the stock has fallen over 30% during that period. The shares were trading at GBX 1,015.00, down by 0.34%, as of 8:05 am GMT+1 on 5 July 2022.
Note: The above content constitutes a very preliminary observation or view based on industry trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
