How FCA’s ‘damning verdict’ could transform travel insurance
The FCA’s recent damning verdict on the travel insurance sector’s treatment of people with longstanding health conditions could transform the market, according to GlobalData Financial Services.
The FCA’s two-year investigation into the treatment of pre-existing condition sufferers in the travel insurance sector was released in June 2018. Currently, insurers either do not offer cover, or do so at exorbitant prices, thus alienating people from the market.
Other criticisms from the FCA were that there is a lack of information about alternative cover if applicants are refused, a lack of understanding from insurers about what risks are considered when pricing premiums, and a lack of clarity in the pricing process.
GlobalData has spoken to several insurance industry insiders ahead of our Travel Insurance: Market Dynamics 2018 report, and the general feeling was that while mainstream insurers need to improve, this sector will be best served by specialist insurers.
This is because they will have the time and resources to investigate each case, possibly meet oncologists, for example, and tailor premiums fairly and accurately based on the level of risk.
This is a considerable and growing market, with the over-65 population not only the most likely group to travel, but their numbers are expected to double in the next 15 years.
Consequently, a number of insurers have entered this space since 2017, even before the FCA released its findings. BoughtbyMany launched its first travel policy in 2017, and has 55 online member groups for sufferers of various illnesses. Its policy has no upper age limit, the only condition being that your doctor permits you to travel and there isn’t a terminal prognosis of six months or under.
Similarly, The Daily Telegraph released a product in 2018 (partnered with Insure & Go), specifically aimed at older consumers, which includes pre-existing medical cover for anyone up to 90 years old, and no upper limit on standard cover. GoodToGo Insurance is another one focusing on this space, as it offers cover for all pre-existing conditions up to a high level of severity, including terminal prognosis.
Evidently certain insurers are targeting this vast and growing sector, despite the potential for substantial claims pay-outs. The FCA’s findings should further boost the sector and help to improve access to insurance for the large segment of the UK population looking to travel in their wiser years.