Holiday Extras Travel Insurance: is a landslide a catastrophe that justifies non-payment?
We believe that this is mistaken, for two reasons:
It is clear from the other items listed in this section of the policy (“avalanche, earthquake, explosion, fire, flood, hurricane, landslide, tornado, tsunami, volcanic activity or outbreak of infectious disease (unless declared an epidemic or pandemic by the World Health Organisation)”) that it is intended to apply to the direct effects of such an issue. The direct cause was the cancellation of a train service by the operator.
The landslide that blocked the Milan-Paris train line is not a ‘catastrophe’ by any usual insurance industry definition of the term. It is not of sufficient scale.
The reputable financial guide, Investopedia, defines ‘catastrophe’ in the insurance industry as follows:
In the insurance industry, a catastrophe hazard is a type of risk that could cause a large number of policyholders to file claims at the same time. Common examples of catastrophe hazards include earthquakes, tornadoes, or acts of terrorism.
Moody’s, the risk management services group, defines catastrophes as:
“perils ranging from earthquakes and hurricanes to floods and wildfires.”
The American Academy of Actuaries defines catastrophes as infrequent events that cause severe loss, injury or property damage to a large population of exposures.
In Europe, Swiss Re’s database of catastrophe losses has the following minimum criteria for inclusion:
a given annual inflation-adjusted economic loss (2010:US$ 86.5 million) and/or 20 fatalities/people reported missing, and/or 50 people injured and/or 2,000 homeless are reached or exceeded.
A presentation to the Insurance and Reinsurance Stakeholder Group of the European Insurance and Occupational Pensions Authority (EIOPA) specifically addressed how to define ‘catastrophe’ for the insurance industry. They drew on a number of internationally accepted definitions of catastrophe. These included the United Nations, as follows:
A serious disruption of the functioning of society, causing widespread human, material or environmental losses which exceed the ability of affected society to cope using only its own resources.
There are others, all of which convey a similar scale of impact.In the UK Lloyds of London applies catastrophe codes to events that it considers to be catastrophes. It has assigned 11 catastrophe codes in 2023. The landslide that blocked the Milan-Paris rail line in August 2023 is not listed among these.
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