Travel disruptions are on the rise, leading leisure travellers to be more selective about their insurance coverage, while businesses seek specialist advice to mitigate risks.
Since 2019, a series of events, including Covid-19, extreme weather, volcanic eruptions, military conflicts, jet safety concerns, computer malfunctions, and airport fires, have caused widespread travel disruptions, grounding planes and stranding millions.
In the United States, air traffic controller shortages and outdated technology have contributed to significant disruptions.
In May, Newark Liberty Airport, a major hub serving New York City, experienced flight cancellations, diversions, and delays due to equipment outages, runway construction, and staffing shortages.
Recently, an attack by Israel on Iran led to the cancellation or diversion of thousands of flights to avoid conflict in the Middle East.
Many insurance policies have numerous exemptions in the fine print. Consequently, travellers are opting for higher-end insurance policies, often with higher premiums, to ensure better protection, according to insights from travel executives, insurance companies, and analysts.
“We’re in times that are quite unstable so people are cancelling more frequently than previously,” said Duncan Greenfield-Turk, CEO of Global Travel Moments, a luxury travel agency based in London.
European tourists have increased their purchases of travel insurance for this summer by three per cent compared with last year, according to German insurer Allianz Partners.
Squaremouth, the largest travel insurance marketplace in the US, has seen a 34 per cent year-over-year increase globally in purchases of “Cancel For Any Reason” protection.
British and US holidaymakers in particular are more willing to pay a higher premium to protect their trip, said Anna Kofoed, the CEO of Travel for Allianz Partners.
About 32 per cent more travellers globally requested an insurance quote from January to April compared to the same period in 2024, according to data from online travel insurance broker InsureMyTrip.
Businesses seek travel advice
There has also been a rise in demand for bespoke travel advice as US President Donald Trump has announced a number of immigration-related restrictions including tighter visa vetting procedures and travel bans.
World Travel Protection (WTP), a global firm that advises businesses on travel risk, said it has seen a rise in US residents being detained at US borders and told their documents were no longer valid as visa rules were changing.
WTP has worked with US government representatives to help those individuals return home, according to Frank Harrison, the company’s regional security director for the Americas.
“We’re seeing a very strong uptick in organizations coming to us wanting to know how to navigate the landscape of the US within the wider business,” Harrison said.
CIBT, which provides non-legal visa and immigration guidance, has seen a 50 per centrise in inquiries since November from companies seeking to better prepare their employees for travel to the US, according to CEO Steven Diehl.
High-end insurance products emerge
One of the newest areas of business is in parametric insurance, which pays compensation automatically after a “trigger” event such as a flight delay without the need to file a claim.
Parametric insurance took off in some countries during the COVID-19 pandemic and in recent months more insurers around the world have begun to offer it.
When testing the market last year, Spanish insurer Mapfre’s Mawdy unit in Ireland said about 11 per cent more customers opted for higher-tier travel insurance packages when instant compensation was included.
Travel destinations have also spotted an opportunity in this burgeoning market.
Marriott Bonvoy’s villa rentals and waterparks offer parametric weather insurance at the point of booking, automatically paying out on rainy days.
Sensible Weather, one of the providers of such coverage, reported its weather guarantees were added to 30 per cent of theme park bookings and 10–15 per cent of higher-value accommodation bookings when they were offered in 2024.
In March, Squaremouth launched a new insurance product with cruise-specific benefits such as coverage for being confined on a cruise ship or missing the port of call.
“Everyone is trying to make it easier for people to understand that each trip (…) is going to have a different set of concerns whether it’s hurricanes or blizzards or what’s going on with air traffic controllers,” Suzanne Morrow, CEO of online insurance broker InsureMyTrip told Reuters.
