Concerning number of Australians ditch travel insurance due to rising costs – survey | Insurance Business Australia
Here are some tips for young and older Australians…
Travel
By Roxanne Libatique
Many Australians have opted out of travel insurance due to the rising costs, according to Compare Travel Insurance’s latest survey.
The survey found that 36% of Australians would not buy travel insurance due to its increased cost, while 26% would only buy the cheapest policy wherever possible. An additional 19% felt they “didn’t need it,” while 12% dismissed it as it “won’t cover their pre-existing illness.”
“Travellers opting out of travel insurance are putting themselves in an extremely vulnerable position. Even if the price of a policy has increased post pandemic, the cost of overseas medical bills or trip cancellations can far outweigh the cost of a policy, particularly in today’s travel climate. It’s important to consider those risks before even contemplating a holiday,” Ball said. “Ambulance costs alone can cost more than $5k. A stay in a US hospital can result in bills amounting to tens or even hundreds of thousands of dollars, which is not the sum most people can begin to contemplate while on holidays. It is vital that all travelers put their health and safety first.”
Insurance for young and older Australians
Young Australian travelers are least likely to take out travel insurance, especially when faced with increased travel costs – with DFAT revealing that one in 10 travelers under 30 rejected the idea of insurance regardless of their destination. Moreover, a concerning number of travelers believe that the government will help them if they experience a medical emergency, which is not the case.
The rising cost of travel insurance has also left older travelers unprotected – with Compare Travel Insurance’s quote comparison on June 27, 2023, revealing that taking a week’s holiday to Bali would cost a 64-year-old $49, but an 85-year-old in perfect health would have to pay over 10 times more for their cover ($505).
“The increase to already high premiums has made travel insurance increasingly unaffordable for older travelers, particularly if they have pre-existing conditions to declare,” Ball said.
Tips for travelers
Compare Travel Insurance says travelers can save money by choosing their cover wisely.
“Compare carefully to ensure you’re covered for any unexpected incidents that may arise and consider where you may be able to scrimp. For example, you may be able to reduce your luggage cover if you are already insured through your home and contents insurance, or through your credit card,” Ball said.
Meanwhile, older travelers should compare policies to get the best deal or seek out a specialist seniors’ insurer.
The Foreign, Commonwealth & Development Office (FCDO) provides advice about risks of travel to help British nationals make informed decisions. Find out more about FCDO travel advice.
Areas where FCDO advices against travel
Your travel insurance could be invalidated if you travel against FCDO advice. Consular support is also severely limited where FCDO advises against travel.
Egypt-Libya border
FCDO advises against all travel to within 20km of the Egypt-Libya border, except for the town of El Salloum (where we advise against all but essential travel).
North Sinai
FCDO advises against all travel to the Governorate of North Sinai.
Northern part of South Sinai
FCDO advises against all but essential travel to the northern part of the Governorate of South Sinai, beyond the St Catherine-Nuweibaa road, except for the coastal areas along the west and east of the peninsula.
The eastern part of Ismaili Governorate
FCDO advises against all but essential travel to the Ismailiyah Governorate east of the Suez Canal.
Western Desert
FCDO advises against all but essential travel to the area west of the Nile Valley and Nile Delta regions, except for:
Luxor, Qina, Aswan, Abu Simbel and the Valley of the Kings
the Governorate of Faiyum
the coastal areas between the Nile Delta and Marsa Matruh
the Marsa Matruh-Siwa Road
the oasis town of Siwa
the Giza Governorate north-east of the Bahariya Oasis
the road between Giza and Farafra (but we advise against all but essential travel on the road between Bahariya and Siwa)
Bahariya Oasis, Farafra, the White Desert and Black Desert
Hala’ib Triangle and Bir Tawil Trapezoid
FCDO advises against all but essential travel to the Hala’ib Triangle and the Bir Tawil Trapezoid.
Conflict in neighboring Israel and the Occupied Palestinian Territories (OPTs)
The Israeli government has declared a state of emergency across the whole country. International borders in Israel and the Occupied Palestinian Territories (OPTs) could close at short notice. As a result, the land border into Israel from Egypt at Taba could close with little notice. Check with local authorities and consult the travel advice for Israel and the Occupied Palestinian Territories before trying to cross the border.
In response to events in Israel and the OPTs, a number of demonstrations have taken place in Egypt and protests have been planned, including after Friday prayers. Demonstrations can take place at short notice, with a heavy security presence in place. You should avoid large gatherings, demonstrations and protests. See Safety and security
Entering Egypt from Gaza
The Rafah border crossing partially opened on 1 November. This is primarily to facilitate the evacuation of seriously wounded Palestinians and some foreign nationals. We understand that the crossing will continue to be open for controlled and time-limited periods to allow specific groups of foreign nationals, including British nationals, to cross. It is for the Egyptian and Israeli authorities to determine who is permitted to cross, and when. The Egyptian Ministry of Foreign Affairs will contact Embassies to let them know when their foreign nationals can cross. Should we receive notification from the Israeli and Egyptian authorities that individuals are permitted to cross, we will notify those people individually.
Movement to the Rafah crossing and beyond is at your own risk. You should only travel if you judge it is safe to do so. Check the Israel and The Occupied Palestinian Territories travel advice.
The Egyptian authorities have said all aid going into Gaza from Egypt must be channeled through the Egyptian Red Crescent:
telephone: +20 226 703 979, +20 226 703 983
fax: +20 226 703 967
They are unlikely to consider requests for humanitarian access made in Egypt at short notice.
Concern for friends and family
If you are concerned about friends or family, or need consular assistance call:
British Embassy Cairo on +20 (0)2 2791 6000
+44 1767 667 600 (UK number) if you experience technical difficulties with the above number
Incidents in South Sinai
On 27 October, an Egyptian Armed Forces spokesperson confirmed that an unidentified drone fell near a medical facility in the Egyptian Red Sea resort town of Taba next to the Israeli border, injuring six people. An additional unidentified drone also struck outside the town of Nuweiba, although no casualties have been confirmed. The authorities are conducting ongoing investigations.
Incident in Alexandria
On 8 October 2023, an Egyptian police officer is reported to have shot and killed two Israeli tourists and an Egyptian tour guide in Alexandria. A third tourist was injured. Remain vigilant and exercise caution at tourist and religious sites, as well as public gatherings. Find out more information on current risks on the Safety and security.
Border crossings from Sudan
There are still people trying to cross the border into Egypt at Argeen and Qustul. Our ability to provide consular assistance is very limited.
If you are a British national and have crossed the border without valid documentation, contact the British Embassy in Cairo for consular assistance on + 20 (0)2 2791 6000.
Before you travel
No travel can be guaranteed safe. Read all the advice in this guide as well as support for British nationals abroad which includes:
advice on preparing for travel abroad and reducing risks
information for women, LGBT+ and disabled travelers
Follow and contact FCDO travel on Twitter, Facebook and Instagram. You can also sign up to get email notifications when this advice is updated.
Travel insurance
If you choose to travel, research your destinations and get appropriate travel insurance. Insurance should cover your itinerary, planned activities and expenses in an emergency.
The IA has warned insurers of the inherent risks related to premium financing as this is particularly sensitive to changes in interest rates. The surge in interest rates in the past two years has brought severe volatility to the market which has impacted both policyholders and the insurance market.
Mr Marty Lui, the IA’s head of Long Term Business (Acting), highlighted the risks involved in premium financing:
during periods of low interest rates, policyholders are able to use premium financing to benefit from the spread between their policy returns and bank loans and also amplify their returns through leveraging; however, this magnifies risks and potential losses;
current high interest rates have already increased the cost of borrowing, and at the same time decreased policy returns as the majority of products purchased through premium financing are now participating products, which offer returns which are not guaranteed and are subject to the investment performance of the insurers and also have longer break-even periods, further aggravating the risks involved in premium financing.
In view of these risks, the IA and the Hong Kong Monetary Authority (HKMA) jointly issued guidance to the industry in 2022 to clarify the supervisory requirements for premium financing. These requirements, which take effect in 2023, are targeted at insurers and insurance intermediaries and focus on enhancing disclosure and improving affordability assessment to protect policy holder interests.
In 2022, the IA received 28 complaints about premium financing, and that figure rose to 50 in 2023. Concerns were raised over the lack of risk disclosure by intermediaries during the selling process and misrepresentation of policy terms and loan rates.
In 2023, premium financing activities will slow down substantially; this business declined from 43% of the total market in 2022 to 21% in 2023 (including a multi-year record low of 9% in Q4 of 2023). This may indicate that amid rate increases the public has become relatively conservative towards premium financing.
The IA and the HKMA have joined forces for another round of inspections related to premium financing to examine compliance with the new requirements and assess market trends. They will share their observations from these inspections with the industry in due course and in the interim, and to enhance policyholder protection, have issued a reminder about the cautious use of premium financing.
Three customers who bought travel insurance from Canadian banks are outraged after being left with large foreign medical bills.
“They’re like a good gambler who never loses,” said Cyrus Derakhshan of Oakville, Ont. He is fighting RBC over a $16,500 claim denial for his 70-year-old mother. “For them it’s ‘Heads I win, tails you lose.’”
Cyrus Derakhshan is suing RBC after it denied his mom’s travel health insurance claim, citing ‘misrepresentation’ of her medical history. (CBC)
The banks refused to pay in these cases, based on how the customers answered broad-ranging questions about their health when they bought their policies.
“They hold all the cards in their hand. It’s a poker game, and I don’t think we are the winners,” said Jean Tetiuk, of Toronto, whose $12,000 claim was rejected by CIBC.
In each case, the medical emergencies abroad had nothing to do with any pre-existing conditions they were asked about.
Paid extra, claim still denied
Another CIBC travel insurance customer, Carmen Peixoto of Chilliwack, BC, fights back tears when she talks about the $10,000 medical bill she is stuck with.
Carmen Peixoto wipes away tears as she talks about the $10,000 hospital bill she is left with, after CIBC refused to pay her claim. (CBC)
“I worked too hard, all my life. And this bank is taking advantage of me? I’m really upset. Really, really upset.”
The 69-year-old has high blood pressure. She paid CIBC an extra $100 premium to make sure her travel insurance would cover her for that. When her blood pressure soared, on her trip last year, she was taken by ambulance to a Geneva hospital.
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CIBC later refused to pay, because Peixoto filled out a CIBC questionnaire — sent to her after she returned from her trip — answering that she had not been treated for a heart condition. Before buying the policy, she had only answered health questions over the phone.
Records show she was tested for heart problems in 2011, after she had pain in her arm, but doctors found nothing significant. Because of those tests, CIBC said Peixoto should have answered yes to the heart condition question.
“I was never treated for a heart condition. I’ve never had a heart condition. I’ve tested and different things but I never had a problem before. And I still don’t have a heart problem,” said Peixoto.
She is also upset because CIBC was asking her health questions after the fact, while at the same time adjudicating her claim.
“I was tricked, because they never had any intention of paying this claim. And I find that totally incredible.”
Tetiuk, another senior, is also furious at CIBC for refusing to pay her $12,000 US medical bill, after she was treated for a blood clot in her lung in Cape Cod, Mass., in 2012.
Unrelated minor health issues cited
Insurance investigators dug into her medical records and found a routine colonoscopy had detected a mild condition called diverticulosis, which caused no symptoms and required no medication.
CIBC said that because of that, she should have said yes to her question about whether she has a bowel disease. It also said she should have disclosed that she has ostopenia, or low bone density.
Toronto resident Jean Tetiuk’s $12,000 travel insurance claim was rejected by CIBC. (CBC)
“Everyone over 60 has this condition, for sure. And diverticulosis was determined when I had a colonoscopy — and I was told to eat a high-fibre diet and come back in another 10 years,” said Tetiuk, who has appealed the denial, with no success.
“If I’m not being treated and I am not taking prescription drugs, in my mind I don’t have a condition that I should be disclosing. I don’t even think about it.”
Go Public asked CIBC for a response to these cases, but didn’t hear back before deadline.
Suing the big banks
Derakhshan is taking RBC to court over the claim denial for his mother, Roghi Derakhshan. He bought the policy for her, and when asked over the phone about his mother’s medical history, he said no to a question about whether she had heart problems.
“RBC Insurance gives you the illusion that they are asking you questions in layman terms and that these are just general questions,” said Derakhshan.
His mom has atrial fibrillation — heart palpitations with no adverse effects — and, like many older people, takes baby Aspirin to prevent problems.
Derakhshan said he answered no to the question, because RBC’s questionnaire said a heart condition “does not include extra beats or palpitations, for which you have not taken medication or received treatment.”
RBC later said that because Derakhshan’s mother had cardiac checkups and tried other medications briefly, that counts as treatment.
Her $16,500 claim — for unrelated treatment of a bacterial lung infection in Zurich — has been denied, citing “misrepresentation” of her medical history.
“My mom was already paying close to $400 for one month of insurance. She was spending thousands of dollars to go on this European trip,” said Derakhshan.
“Do you think that for another measly $100 of insurance I would have any reason to misrepresent or lie on her behalf?”
Derakhshan is suing RBC for $25,000 in small claims court.
“My objective is bigger than my mom’s case. I want to stand up for people who have gone through the same thing, and my final goal is to change policy.”
RBC justifies denial
The head of RBC’s insurance division, Martha Turnbull, told Go Public that even though Derakhshan didn’t intend to answer the question incorrectly, the claim denial is justified.
Martha Turnbull, head of RBC’s insurance division, says that even though Derakhshan didn’t intend to answer a question incorrectly, it would be unfair for other customers to pay his mother’s claim. (CBC)
“It’s a very regrettable decision,” said Turnbull who added that RBC denies two per cent of claims, for all types of insurance it sells.
“Unfortunately, we need to make consistent decisions for all clients. Denying a claim is the most difficult decision we make in the claims department. We take our responsibility and accountability to our clients very seriously.”
She also said RBC will fight this case in court.
“We will not be settling it,” said Turnbull. “We are making sure that we treat every client with the same respect and care and that if the clients answer the questionnaire correctly they pay the correct premium, they’re not in turn subsidizing people who don’t answer the questions correctly.”
Insurers hold ‘legal weapons’
Insurance broker Bruce Cappon is lobbying for provincial regulators to force insurance companies to be more up front about what the medical questions really mean.
“The way the system is rigged right now is that insurers have a legal weapon. “The misrepresentation clause is a legal weapon,” said Cappon.
Ottawa insurance broker Bruce Cappon is lobbying regulators to make it tougher for insurance companies to reject claims for unrelated health issues. (CBC)
“I find it very unfair that you are asking these people to fight back when the remedy would be very simple, just to add a few changes to the regulations.”
He also thinks it should be illegal for insurers to refuse to pay for treatment unrelated to any pre-existing conditions.
The industry association wouldn’t say what percentage of travel medical claims are denied for misrepresentation, but that it is trying to educate consumers on the pitfalls.
“Know your health and consult a health-care provider if you have any questions,” said a spokesperson for the Travel Health Insurance Association of Canada.
Cappon advises people to go as far as checking their medical records before purchasing policies, because that is what the insurance companies look at.
“There’s no advantage on the insurance providers to first provide the consumer with the information they need to make an accurate response. And that’s what’s got to change.”
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