The Daily Telegraph - Saturday - Money
Travel insurers ‘dragging their name through the dirt’
Faith in insurers could all but collapse as tens of thousands of people have been stuck in the middle while insurance firms and travel operators shirk responsibility to compensate people for cancelled trips.
Loose guidelines have allowed firms to pass the buck to each other and deny liability at the expense of innocent consumers.
Nearly all forms of international travel are at a standstill after the Foreign & Commonwealth Office (FCO) advised against all non-essential trips. Anyone who has booked a package holiday is due a full refund from the operator. However, thanks to the backlog, Abta, the travel association, has advised consumers to seek refunds from insurers because it is normally quicker. Yet this has led to insurers denying claims and pushing customers back to their operators, leaving them frustrated and out of pocket.
Martyn James of Resolver, a complaints resolutions service, said the main issue was who was liable. Customers who had been unfairly turned away by insurers should take their case to the Financial Ombudsman, he added.
Costa Giardina, 47, from Surrey, was initially told by both his insurer and tour operator that neither would repay the £22,000 spent on a “once in a lifetime” safari trip.
He said: “I’m being bashed around between pillar and post. I spent about 20 hours on the phone and I just want my money back.”
Mr Giardina’s travel insurer, Axa, told him he would be covered but then changed its mind and refused to pay out, citing the travel regulations that tour operators are obliged to refund customers. Axa apologised for its initial mistake but stuck to its refusal.
Mr Giardina said: “It’s unprofessional and traumatising when you are told you will get all your money back and then you are told it was all a mistake.”
After Telegraph Money intervened, tour operator African Pride paid him back the full amount but insisted it had been following Abta guidelines in refusing his refund. David Holland
Money of African Pride said he was aware that his company would be legally obliged to pay a refund but insurance companies should pick up the cancellation penalty. He said: “It can be difficult for communities in the African travel market to repay money because they need it. The refund has come out of our own pocket and insurance companies should play the game. They are trying to pass the buck to us and not sticking to the rules.”
Alison Nicholson, 57, had travel insurance with a disruption add-on via Aviva. It refused to pay her £750 claim for a cancelled seven-night trip to Devon. After Telegraph Money contacted Aviva, it said it would honour Mrs Nicholson’s policy and pay. However, after this promise had been published in this newpaper, Aviva reneged. Mrs Nicholson received a letter claiming she had not gone on her trip because she had “not wished” to. Aviva has since once again confirmed a full refund.
Brian Brown of Defaqto, a ratings agency, defended insurers and said policies were not written to cover a world pandemic and no one had envisaged a countrywide shutdown. Customers had been receiving wrong information from insurers scrambling to understand the limits of their policies.
Others dispute this. James Daley, of the campaign group Fairer Finance, said everyone in the business of risk, including insurers, knew a pandemic was a real and dangerous threat.
He said the outbreak had exposed pockets of bad practice. “Travel insurers are notorious for having very little flexibility and they have been referring to the small print,” he said. “There are growing number of cases where people are being let down. It is going to drag the industry’s name through the dirt.”
A spokesman for The Travellers Boutique, a travel agency, said the Government was failing to support the industry. She said: “Insurance is there for instances such as this. It is like the Government has a death wish for the travel industry.” Small travel businesses would be left to pay out and many would have to close down, all while insurers stood idly by, she added.
Lack of clarity over who should pay means many holidaymakers are left with no refund, writes Jessica Beard
Telegraph
£22k The payout received by one reader for his safari trip after our intervention