Terror attacks and how they might affect travel insurance industry

It is not just the people belonging to the place who pay the price due to terrorism in their region but those people as well who have overseas travelling plans ahead or travel overseas frequently. People who have travelling plans will have to cancel their trip either and suffer the loss of amount already made as expenditure on the trip or will have to travel if it is important for them. In case they have their travel insurance policy in place, their amount of tickets is reimbursed. And in the later case, the place to be visited plays an important role. For instance, recent terror attacks in Paris as well as Brussels made people cancel their trips to the place however those people who anyhow want to visit such places, their terrorism coverage may not cover them for any loss due to terrorism, because they are knowingly taking the risk.

In recent years, people have realized the importance of travel insurance since it helps them to get the protection from various kinds of uncertainties like loss of baggage, medical emergencies etc. Now, after the worldwide travel alert, people have started taking travel insurance very seriously.

The question that arises is how these kinds of attacks affect travel insurance industry.

If the recent survey conducted by ICICI is to be believed, 80–90 per cent of people are aware about travel insurance and its features however only half of them buy it when they go for trips abroad. The survey also revealed that though there is increase in the number of people going abroad but rarely any momentum is seen on travel insurance demand. This proves that people have always underestimated the importance of travel insurance. It is mostly the employers that provide travel insurance to their employees as part of their organizational responsibility. Besides this, a small percentage of travelers prefer having travel insurance. A percentage of travelers buy travel policy because it is made mandatory in few of the nations like European nations and US. However, after these terror attacks, demand for travel insurance has risen quite a bit if not considerably. Many people may cancel their trips that they planned for holiday purpose but people, who are professionally bound or have their relatives abroad or have other significant reasons, would anyhow not prefer to cancel it.

Therefore it neither would be right to say that travel insurance industry will suffer losses, nor this that the demand of travel insurance will go up drastically. But yes, travelers would not avoid travel insurance anymore. People who travel frequently would consider having travel plan even in countries where it is not mandated yet.

According to the reports of Statista, the statistics portal, around 130,000 people lost their lives worldwide due to terrorism in the period between 2006 and 2013. Not less than 90,000 terrorist attacks were reported during this period. According to the portal, the number of terror attacks has decreased but this does not guarantee complete elimination of the cause. There were many instances of terrorism seen in 2000’s due to the distressing situations in the US and Middle-East. In the previous year, Iraq, Pakistan and Afghanistan saw maximum number of terrorist attacks which numbered to 7400.

Whereas, according to Global Terrorism Index, terrorism has never subsided, in fact, it kept on rising. Number of deaths due to terrorism, has only increased, which was 3,361 in 2000 and 17,958 in 2013 and in the next, the number increased to 18000.

Insurance companies do take this into consideration and premium rates would definitely increase, especially for the terrorism prone regions of the world. This would make people have second thought to buy travel insurance or even to travel without travel insurance.

Though insurance industry expected that the recent global terror attack would increase the demand for travel insurance but a few of the experts state that travel insurance industry in India would not feel any major surge due to these attacks.

Most of the people do not buy travel insurance even when they are aware of the possible risks during their travel because they are not aware of what actually travel policies have to offer. Many assume that only the uncertain events during travelling are covered under the policy like loss of passport, loss of baggage, medical expenses, emergency evacuation, accidental injury and other kinds of losses while travelling. A travel insurance policy not just covers these events but also those which may occur before you start travelling, that is, trip cancellation and trip interruption.

You need to read the fine print in your policy documents that often are filled with exceptions. Just review them to understand the extent to which you are covered against terrorist attacks.

Even though you may cancel your recent trips due to the recent happening in Paris or Brussels, but do not forget to buy travel insurance policy next time you plan a trip. A travel plan will of course give you peace of mind while travelling but it will also reimburse your ticket amount on cancelling, in case you ever need to do it.