Holiday travel insurance purchase rises as omicron spikes.
Preparations for 2021 holiday travels were well underway when the omicron variant began spreading in the US. While earlier in the pandemic, airlines were offering flexibility around changes and cancellations, those options no longer come for free.
In the face of uncertainty around what this strain would bring, some travellers cancelled their plans, while others stayed the course. A third group turned to travel insurance so that they could plan their trips without the risk of forfeiting what they’ve paid.
According to a survey from December, nearly half of respondents had already purchased or were considering purchasing insurance for their holiday trips. For comparison, in 2019, only 14% of travelers planned to buy travel insurance the following year. Today, most are looking into insurance for hotels and airfare–which are among the costlier booking categories.
Standard insurance policies usually cover trip cancellations, delays, or interruptions. But this season, people are looking specifically for insurance that will allow them to recoup costs for COVID-related cancellations. This is not standard for all policies, and certainly wasn’t on anyone’s radar two years ago.
Travel insurance can come from many different sources. Some credit cards offer built-in protection which is automatically applied once the purchase is made. Airlines, hotels, and rental car companies usually have their own insurance partners that they recommend during the booking process. (Who among us isn’t familiar with the “Do you want to protect your trip?” screen?)
I believe that the hospitality and tourism industries will continue to be plagued with uncertainty for the foreseeable future. With that in mind, free or bundled travel insurance could become common to attract travelers–almost like the new and improved “free cancellation” offering for 2022.
And if that is the case, or if consumer preferences continue to trend towards trip protection, it is almost certain that we will see an influx of new insurance providers entering the market–creating a new prospect for investors or entrepreneurs in the space.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.