What’s bad news for the rest of the industry is good news for cruise insurance providers, says Dan McGinnity, a Vice President at Travel Guard.
“We’ve had so many events that call attention to the importance of travel insurance — the two February east coast storms, the two earthquakes, the volcanic ash, and now the Gulf and the fact that eight to fourteen hurricanes are predicted this year,” McGinnity says. “Our numbers are through the roof in terms of call volume for clients needing assistance – up 300% during the 10 day period of the ash crisis, and call volume is still way up.”
Despite all the headlines, McGinnity is the first to point out that most cruise insurance claims are for personal reasons. “The vast majority of claims for people booking cruises are trip cancellation claims related to an illness or injury to the traveller or immediate family member,” he says. “In terms of actual numbers, 75% of claims are trip cancellation claims; of that, 60-75% are medical related.”
McGinnity points out that claims situations can be subjective: “Insurance is black and white, and then there is some grey,” he says. “Sometimes it’s how you interpret the grey that can make a huge difference.”
He points to the Chilean earthquake as an example: “One cruise line had people both flying into Santiago to catch a ship and departing to return home. That cruise line’s insurer made the determination that the closure of the airport was done by the government. They made a blanket determination that they weren’t going to provide any coverage for people who were or were not insured.”
Travel Guard interpreted it differently. “We viewed the closure of the airport as due to the earthquake and determined clients who couldn’t get to Santiago or even the alternative port were covered as part of trip cancellation,” McGinnity reports.
The volcanic ash cloud was another confusing situation. McGinnity draws an analogy with hurricane season: “Say you book a cruise from Miami and decline the insurance. Next day on the news there’s a hurricane bearing down on Miami. You say, ‘Holy cow, I better get some of that travel insurance.’ To us, that’s like going home, finding your house on fire, and then saying, ‘Holy cow, I ought to get some home insurance.'”
Following that logic, if you bought cancellation/trip interruption insurance prior to April 13th, you were covered for the initial event, which Travel Guard considered to end on April 22nd, when Eurocontrol announced that air traffic had returned to normal levels.
Does the recent prediction from the National Hurricane Center that 2010 would be a stronger than usual hurricane season make a difference in insurance sales for cruises to the Caribbean? “We’ve found that until the first one hits, there’s not much of a bounce,” responds McGinnity. “
But he does stress that hurricane season interruptions are one of the most frequent claims involving cruises, and McGinnity advises agents to inform their clients of that fact. “There’s a fine line for the travel agent and, really, for us, in terms of you don’t want to be the purveyors of doom and gloom. But I do think agents have a responsibility to let clients know that insurance is going to provide financial protection for your trip investment in case you have to cancel or your trip is interrupted.”
On the subject of cruise line insurance versus third-party insurance, McGinnity says the most important comparison is comprehensiveness. “For me, the biggest thing is that the person buying third party insurance gets more comprehensive coverage – door to door, every element is covered. With cruise line insurance, the only thing you’re covered for is the cruise portion, unless you buy the whole package (air, hotel, etc.) through the cruise line.”
McGinnity says cruise insurance is important to his industry. “It’s estimated that prior to the events of 9/11, somewhere between 8 – 9% of people purchased leisure travel involving prepaid, nonrefundable, purchased travel insurance. Today, it’s closer to 30%, and cruises are much higher than that.”
Through it all, McGinnity says the role of agents is vital. “The retail travel channel is still our biggest. While the number of travel agencies out there have been pared down, we’re finding the ones who are left are very business focused and fully understand the value of travel insurance – not only from the standpoint of protecting their clients but as ancillary revenue which travel agents earn from sales.”