Travel Insurance that cover lo-cost airlines

smala01

I take a number of trips a year on lost cost airlines, so i thought it would be sensible to check the small print of my annual insurance cover. I was shocked to find that my insurance does not cover me if im left stranded at an airport because the flight is cancelled ! the onus is on the airline to protect you.

So i thought i would research the airlines terms and conditions:

Easyjet - If they cannot get you home on the flight you booked, they will transfer you to the next available flight and pay for accomodation if necessary

Ryanair - Absolutley nothing ! You are on your own.

So my question is: What insurance can i buy that would protect me from cancelled flights of the low cost airlines ??

richardw

This was covered in the Guardian's Money section on Saturday

http://money.guardian.co.uk/weekly/story/0,,2103913,00.html

peterbaker

Oh no, this is ridiculous news.

I had mistakenly thought that Travel Insurance heavyweights like AXA were working for their money and making sure their product caught the traveller when they fell, even when the traveller was using the tricky, all-pervasive, new millennium, low-cost modes of aviation.

I have an Egg Travel Policy which unfortunately is underwritten by AXA.

In February 2005 I was out of pocket after Ryanair cancelled two nights in a row and left a heap of passengers stuck in Denmark. This was just prior to the implementation of the EC directive making airlines a bit more accountable for cancellation costs.

Rather than wait like a lost unfed fenced-in sheep for two days for Ryanair to get me home from that airport (like some people did), I caught a train and booked a Ryanair flight from another airport getting home just half a day late but incurring about £130 in additional costs including £85 to Ryanair for the new ticket.

Ryanair would not entertain any aspect of my increased costs. They simply refunded the original £17 and washed their hands.

I actually complained here on MSE about it, but in the end, gave up banging on their door and very late in the day mentioned it to AXA while I was complaining about AXA failing to issue an Egg renewal policy and leaving me without cover until I noticed. As they were on the back foot, they entertained my late claim...actually I never did get around to sending them the necessary paperwork!

Anyway, that was when I realised that AXA's policy wording didn't hang together too well on this question of delay or cancellation. I told them so and ultimately they agreed to pay a goodwill only amount of about £80 after deducting a notional £50 excess. I had some sympathy with AXA then, because it was obvious that Ryanair were reinventing who should be liable and were making it bloody difficult to claim from them (You still have to fax everything to Ryanair and they email their reply but you are not allowed to use email yourself). As an insurance man I could see that Ryanair were attempting to transfer risk to travel insurers in a big way.

There are two slightly similar industry-wide transfers of risk I can think of to compare this with. The first was in the seventies I think (after the dry summer of 1976 I guess, but might have been an earlier drought), when the building societies used their commercial clout on their preferred insurers to force them to start including as standard meaningful subsidence cover in buildings policies, where there had been no such cover before. Insurers were dragged kicking and screaming into a whole new world of massive subsidence claims.

The second was more subtle and actually was I think first devised as a sneaky wheeze by upstart low-cost insurers against their usually much more substantial household insurance competitors. If you made a claim on your low cost travel policy you might easily find them using small print as authorisation to contact your household insurer via the backdoor and demand a contribution from any "All Risks" cover you might routinely have there that covered the same loss. Now it is fairly routine and to be honest your travel baggage insurance limits are thesedays likely to have been pared so thin that you'd better be sure your household policy covers important items once and for all!

These two examples didn't actually bother the customer too much. The first was actually very good for customers whose houses had cracked up, and the second was a bit of a cheek but did not leave the customer "between two stools" (i.e. NOT out of pocket because neither would pay)

But wind forward to 2007.

We now have had two years of "bedding-in" of the EC directive and our low cost airlines (one or two in particular) have barely flinched. They have seized on the get out clause for them which talks of cancellations due to incidents outside their control and are avoiding costs of cancellation almost as successfully now as they were when I made my claim. I kind of knew this but had falsely assumed my Egg Travel Policy would protect me...doh!

Now I stumble on smal01's original post and learn that AXA (now one of the biggest insurance groups in the world using a name that was invented out of thin air in 1985) have also stepped back from the ever-widening, if not already yawning gap and have actually tweaked or interpreted their own gappy small print (it doesn't much matter which if they are minded to evade these claims) so as to leave us customers high and dry.

I have had issues with AXA on and off for years. It is difficult to pin them down - they even tried to bribe me not once, but a number of times! The best way to understand AXA is to understand what huge piles of our money they have sought over 15 or 20 years to control and manipulate, and have succeeded in controlling and manipulating, even to the point of going to the High Court to twist our judiciary's arm on a whole new way of looking at customers money so they could treat great "lost and found" lumps of it as their own!

I started in insurance in 1978 and in the 80s AXA were a mystery company to me. Like Ryanair they are a pathfinder in their industry and have broken moulds. They were originally a French company I believe and in large part gained momentum by very cleverly merging with a nationalised outfit in France which had been recently (or simultaneously?) privatised making a few in the right place rather rich rather quickly. You can imagine the kind of leadership that might have spawned. Acquisitions then soon went stellar. You can read on their website that in 1986 the AXA Group held its first corporate seminar in the Sahara Desert. It never ceases to amaze me how huge multinationals emerge so fast from nowhere thesedays!

Anyway, that just about sums it up. Certain upstart very big low cost airlines don't want to deal with cancellations, and now certain upstart very big insurers also wish to look the other way and tell their customers to go forth...

Who cares? They certainly don't. Where does that leave us?

While you are thinking about that I simply suggest you heed the signs "Beware, pickpockets operate in this area" or somesuch....

Donnie

There is an alternative. Details via PM only.

richardw

Donnie wrote: »

There is an alternative.

Stay at home and watch the telly?

RibAd

If an airline decides to cancel their flights for the heck of it, then of course it's not covered under travel insurance. Why would it?

Technically within the EU and under EU Air Passenger Rights it is up to the airline to compensate you if you are flying with an EU Airline or within the EU.

The reason why there's articles on this recently and why you should know about it is due to the extensive cover Ryanair are getting because have refused to compensate it.... and I do recommend reading up on this.

If the plane hasn't had some unforseen mechanical failure or something very similar or extreame then it may be covered.

I suggest that everyone should really look under the "What is not covered!" section under eahc section of the policy.

peterbaker

RibAd wrote: »

If an airline decides to cancel their flights for the heck of it, then of course it's not covered under travel insurance. Why would it?

I am not sure of the point you are trying to make here...

The good thing about large insurance companies used to be that you could grow up understanding basic concepts about was was normally covered and what obviously was not, and then claim with confidence if you needed to.

The sad thing about all insurance in 2007 is that you can expect it to change as often as the terms in your credit card agreement and the frequent changes are equally unpredictable.

When it came to insurance cover for involuntary cancellations and travel delays, I think I am right in saying that the main exclusion in a travel policy was just cancellations and delays caused by strikes once upon a time.

Basically insurance has habitually covered things which were completely fortuitous, at least as far as the customer is concerned. Travel Insurance for punters I think could be confidently expected to habitually cover most losses which occurred as a consequence of negligence of others, or of their errors or ommissions, or even as a result of deliberate actions of third parties (like airlines who cancel one flight in favour of another) ... until the new Millennium perhaps.

If, via subrogation, an insurer had good cause to hold a third party legally liable for costs they had paid to their travel insurance customers, they settled with the third party separately, causing no fuss to the airline/travel insurance customer.

That's what's changed.

It is now more like a three cornered boxing ring. The two commercial players (the insurer and the airline) frequently hide behind small print and refuse to come out, leaving the punter stranded with no option but to pay their way out of a problem and fight for their rights afterwards.

Naturally most people now give up, and that tends to profit both the airline and the insurer.

I used to have a very good idea in my head about what was a claim and what wasn't, but now I am as clueless as the next punter until I have read every word of the latest policy and analysed it with my insurance-trained brain. The rest of you barely have a chance had you but realised it!

RibAd

peterbaker wrote: »

I am not sure of the point you are trying to make here...

That's what's changed.

If you read my whole post together, it would make more sense. Travel insurance covers various reasons for cancelations, but why should they cover the cost of a claim just because an airline doesn't want to fly a half full plane? That's not the travel insurance company's fault - It's the airline's.

As for the rest, hmm... well let's think about what HAS changed in the last 10/20 years. More people are travelling. People are living longer and taking the time to travel instead of licing out their final days in a nursing home....Flight times are shorter than they were before. There's more money available in some socities and in some countries and resorts are still popular. What would have been seen as a traditional holiday to the seaside has been replaced by package deals to Turkey, Crete, Majorica, Menorca, Tenerfie, etc etc etc.
Flights are also cheaper which has changed people's ability to travel to destinations that before would have set them back a small fortune.

So of course, with all these kind of changes, the travel insurance industry had to move on and their cover has reflected the changes in socities' own behaviour. Not to forget that airlines have different regulations than travel insurance, so different directives are in place.

Have you noticed the defination of Valuables changing yet? It's changed from the traditional jewellery, furs, etc to Ipods, hand held computer games, portable DVD players and such technical items.

peterbaker

Yes, Ribad but I don't think many of the changes you list are good reasons to expect the travel insurance to change so much that nine times out of ten, the customer feels aggrieved in some way when they claim.

For example, the now massively inflated numbers of people travelling means more business to the insurance industry.

The package holiday industry is actually perhaps somewhat declined compared to 10/20 years ago, with people arranging their own flights transfers and accommodation separately.

Aircraft are far more reliable than even 10 years ago, so delays and cancellations as a percentage of planned flights are almost certainly far lower than they once were.

And people too (in health terms anyway!) People do indeed live longer and travel in retirement. Many retire early. 50 is the new 40, 80 is the new 70 if you like. Insurers coped with the holiday health of hoards of coughing mineworkers and smokers 20 years ago. There is no reason why the medical costs for the new travelling population should be any greater than they were, especially for travel within Europe.

Nope, I think the truest words you wrote were "the travel insurance industry had to move on and their cover has reflected the changes in socities' own behaviour."

There has long been an insurance industry, and the best underwriters in it knew where their profits habitually were earned. Travel insurance was NOT obviously one of those areas. Many main household insurers only sold Travel insurance to their existing ciustomers as a favour, but it was good cover.

For a generation it was small premiums per customer (of little interest to main insurers as I have said) and quite a proportion was controlled by Travel Agents and Tour Operators who wrote out policies from an NCR pad on huge commissions. In those days it made significant profits for the smaller middlemen in the travel business, and the underwiters of the pad policies were often a bit nefarious. Sometimes in the heyday of cut-throat package deals, the commission on the holiday insurance was the difference between profit and loss for the high street agent that sold the holiday. Big insurers sometimes dallied with pad-schemes for travel agents, but mainly it was just a few. When people/society had noticeably started travelling more about 20 years ago, annual policies became more popular, first for business travellers, then for personal travellers. That's when the so-called "Travel Insurance" industry perhaps floated on its own, because with a projected market in the UK worth maybe £100 per customer x maybe 10M who were travelling regularly, a few middlemen saw their chance to go for their habitual big commissions on the new kind of numbers! So they set up big schemes. Some underwriters got sucked in and lost a packet but there were always others who fancied their chances and took over dodgy schemes at renewal. Others were just continually blinded by growth.

Eventually, the biggest underwriters and brokers/agents were occupying the same playing field and underwriters bought some "brokers/agents" and vice versa. Everyone involved decided well this was big so if we are in it we'd better all be making a profit like the middlemen always did, so thats when they started evolving the cover in the ways that we now know to be the norm.

Talking of changes over a 20 year period, it is important to understand that the insurance industry itself now is predominantly "middle-men". He who is left holding the baby at claim time is the one most likely to catch a cold. You may have heard of "reinsurance". That's where one insurer lays off his risk on another (for a price). Some insurers are very adept at writing large volumes of business but don't keep the risk for themselves. They take a nice "cut" of the original premium. Then there is out-sourcing of claims handling. Once upon a time, any self-respecting insurer looked after their own claims ... it is the one part of the business where control of monies paid out directly affects the bottom line of profit. That's all changed. You are rarely now likely to be dealing with the insurer when you claim. Instead it will be someone paid by the underwiter. Guess what happens then?

Because so few sellers of anything thesedays can sell on anything other than price, we are left with travel insurance products which are the same price or less than they were 20 years ago and are often no longer robust products but instead are full of the hot air used to market them, coupled with the effects of the vested interests of all the parties involved in selling them and paying the claims.

Take Egg for example. We on MSE know that about 3 or 4 years ago, Egg fancied a large slice of the Travel Insurance pie. They came up with what looked like a pretty good product underwritten by AXA. They gave away a pile of money in discounts (like they gave away a pile of money when they launched their savings products), just to get market share.

If you claimed, you would be speaking to a third party (not Egg and not AXA). If you claimed like me, then you would quickly encounter problems. So I called Egg and I called AXA, playing both ends against the middle. Sometimes when a big name like Egg is still trying to grow the business, tactics like mine work. When these products become more mature, and enter dastardly Ryanair with their cancellation malarkey, then that's when claiming becomes variously like negotiating a path through a mysterious churned up farmyard complete with variously-tempered animals or one through a secure electronically controlled compound where even customers used to getting muddy will fear to tread.

Society has indeed become more dishonest, and so has business. Far more people come into contact with big business than in previous generations. Years ago, insurance sales were more personal, travel sales were more personal. Everything was. Personal relationships in business had more immediate consequences, upsets could not be ignored and so were to be avoided by what was called good service. Today a punter is just a number to be exploited, and customer service is just a term to bracket a company's strategy for keeping an upset customer at arms length. And the punter has learned to exploit in return. It is often not pretty, and it leaves unanswered questions about which caused the other.

Donnie

Thankfully, we have this forum to help each other through the mire.

RibAd

Peter, you have raised some very valid points here. I especially liked this description:

peterbaker wrote: »

When these products become more mature, and enter dastardly Ryanair with their cancellation malarkey, then that's when claiming becomes variously like negotiating a path through a mysterious churned up farmyard complete with variously-tempered animals or one through a secure electronically controlled compound where even customers used to getting muddy will fear to tread.

How well described! Actually although I sympathise, that is probably the funniest thing I've read/seen in the last week.

Customer service is not comletely dead. It depends with who's servicing the product. It is possible to have personal relationships within the big businesses between the business and customers. Customer service is not about keeping the customer at arm's length... it may be in some cases, but not all. You'd be surprised what goes on behind the scenes in a call centre that has good and motivated staff that give a damn that have to fight for the customers as they see them as people and not a policy number. Often it's a fight against policy terms and conditions and a battle with claims.

But, as Donnie said, we do have this forum to help on this.

Does anyone else have any thoughts on this?