How much is the average claim?
On average, Kiwis have received $1884 for claims related to international travel.
Surprisingly, this is eclipsed by the average payout for a domestic travel claim, which is 12 per cent higher, at $2164.
At first, this seems at odds with our perceptions of travel. International trips often involve expensive airfares and costly itineraries, things we certainly want cover for. Meanwhile, quaint domestic experiences feel far less risky and unworthy of insurance.
The difference, according to Southern Cross Travel Insurance CEO Jo McCauley, is the difference in what we book for international and domestic travel and how easily they can be refunded.
"Taking a look at our data, most domestic claims are for cancellations of trips, with quite a few Fiordland cruises and guided walks cancelled at the last minute," McCauley explained.
"These wonderful adventures can be quite expensive and understandably have strict cancellation policies," she continued, saying customers often can't recover costs from service providers and instead need to claim full costs through insurance.
Internationally, however, people tend to seek cover related to flight changes or additional accommodation when delayed overseas. These costs, McCauley said, tend to be quite small as airlines don't charge a large change fee and many travellers are visiting friends and family who can provide accommodation.
Most common reasons for claiming travel insurance
Most Covid-19 claims received by Southern Cross were for travel cancellation and interruptions that occurred when customers contracted Covid-19 while on their holiday.
"We launched Covid cover in August 2021 because we knew this was important for customers, especially in this new environment where peace of mind is paramount," Southern Cross said.
Recent Future of Travel research shows that nearly three quarters (72 per cent) of New Zealand travellers consider Covid-19 cover as one of their top three most important features of travel insurance.
The other two features were price and the ability to choose different levels of cover.
Destinations Kiwis most often make Covid-19 related claims for
Southern Cross revealed that most Covid-19-related travel claims were for trips to Australia. The United Kingdom took third place, followed by the Cook Islands.
Considering most Kiwis have recently travelled to visit family, or to "get away", these destinations make sense.
The most common reason claims are denied
According to McCauley, Covid-19-related claims tend to be denied by Southern Cross for three key reasons:
• The insured traveller was diagnosed with Covid-19 while travelling to a destination MFAT classified as a level 3 or 4 travel advisory because of the risks of Covid-19.
• The insured customer wasn't diagnosed with Covid-19 but was a close or household contact, which is not covered under the policy.
• The insured traveller cut their trip short after catching Covid-19 even though the rest of the journey was not affected by Covid-19.
While Covid-19 policies often cover travel changes and cancellations caused by the individual catching Covid-19, they don't cover changes made simply because someone doesn't want to travel anymore.
The silver lining
The past two years have presented massive challenges for travellers and the tourism industry, however McCauley said there had been some silver linings.
"We're certainly starting to see our customers engage a lot more with their travel insurance policy."
Instead of blindly picking an insurance provider or policy (or not choosing one at all), travellers are deeply engaging with the fine print to make sure their post-Covid trips are covered in the right ways.
"We're experiencing customers phoning us up a lot more than they used to, asking us a lot more detailed and hypothetical questions about what would occur in a certain situation," McCauley said.
"It's fantastic to see that customers are really digging into the details of the plain-English policy they're buying. This shows us that they value travel insurance and they're taking the time to understand how their travel insurance will cover them. I'm really hoping that this is a trend that we'll see continue."
