UK travel insurance complaints rise, but 99.993% of people have no complaints at all

complaint

The number of travel insurance cases brought to the UK’s Financial Ombudsman Service (FOS) has increased by 19% in the past year

The FOS said it received 4,466 complaints about travel insurance in the last financial year (2023/24). In the past 10 years, the only time that figure has been higher was when complaints surged due to the disruption caused by the Covid-19 pandemic. It demonstrates that, so far, complaint levels have remained higher than pre-pandemic levels – with cases primarily driven by people dissatisfied with insurers declining their claims.

“In particular,” said the FOS in a media statement, “we are seeing rising trends related to policyholders being told medical conditions had not been properly disclosed, people being dissatisfied with the levels of emergency assistance after falling ill abroad, and complaints about delayed or missed flights, as well as lost and stolen luggage.”

In the previous financial year (2022/23), there were 3,745 complaints brought to the FOS. Prior to the pandemic in 2019/20, that figure was just 2,510. Abby Thomas, Chief Executive and Chief Ombudsman of the Financial Ombudsman Service, commented: “With the holidays upon us, and millions of families heading overseas on their summer breaks, it’s crucial that people taking out travel insurance know what they are signing up to. It’s concerning to see so many people dissatisfied with their insurance provider. That’s why it’s so important firms take the time to explain terms, treat people fairly, and ensure everyone understands their policy.”

From the side of the insurance industry, it is vital to recognise that many holidaymakers are buying their policies based on price alone, and not taking the time to read the terms and conditions, which they accept at the time of purchase. UK insurers are abiding by the Financial Conduct Authority’s move to Consumer Duty, and are – by and large – doing their best to treat customers fairly. There has been much progress in the industry to offer clear and concise language surrounding the protection offered by travel insurance policies. However, there is little doubt that these policies are complex, and many customers simply do not understand what it is they are buying.

In response to recent news from the FOS about travel insurance complaints, Tim Riley, Managing Director of travel insurer True Traveller, said: “These figures released by FOS actually show that 99.993% of people taking out travel insurance have no complaints at all. I hope that  people aren’t misled by the release of these figures and it doesn’t put them off buying travel insurance, which is vital for those going on holiday to protect against anything going wrong. We urge people to read their travel insurance policy documents thoroughly – all insurers provide an easy-to-read IPID (Insurance Product Information Document) – and also speak to their insurers about anything they are not clear about.”

In an effort to educate customers about the policies they are buying, the FOS released a series of ‘top tips’, which include:

  • Always check the small print
  • Understand exclusions and why the customer isn’t covered under certain circumstances
  • Travel insurance is not private medical insurance
  • Disclose medical conditions
  • Repatriation isn’t guaranteed for policyholders who are unwell
  • Travel insurance may not cover flights missed as a result of security delays, airport evacuation, and/or problems with visas and passports
  • If your circumstances change and you can no longer go on holiday, your travel insurer won’t always cover you
  • Lost luggage – policyholders need a Property Irregularity Report from the airline, plus other documentation, before a claim would be considered.

Insurer/customer interactions cause frustration

Which?, a British consumer organisation that aims to educate and help customers making decisions about purchases of any nature, carried out its own research in May 2024, which suggests that interactions with travel insurers have become increasingly stressful in recent years.

The company said: “We collated the written decisions of 2,933 travel insurance complaints made to the Financial Ombudsman Service (FOS) between 2019 and 2023 (inclusive), and analysed them using artificial intelligence (AI). In upheld cases – where the FOS ruled that the insurer was in the wrong – references to ‘distress and inconvenience’ increased over the five-year period to reach a peak in 2023. Between October and December that year, it was cited in more than two-thirds of the upheld cases we analysed.” During those three months, the FOS upheld 44% of complaints brought by travel insurance customers.

Then, in April this year, Which? also surveyed over 800 of its members who’d made a travel insurance claim in the past year. Sixteen per cent had seen their claim rejected outright, or received partial settlement. The data showed that for 31% of claimants, their claim was rejected as the result of a policy exclusion. Which? commented further: “A quarter (24%) of the claimants we surveyed were dissatisfied with how the process went. The chief causes of frustration were the speed with which claims were handled (43%) and the efficiency of the process (32%). Claims outcomes took third spot, leaving 31% dissatisfied. A further 25% cited their level of confidence in the fairness of the process as a reason for disgruntlement, while 23% were critical of how effectively the insurer kept them up to date on the progress of their claim.”

With claims being a particular issue for customers, perhaps the move to digital claims portals and parametric insurance solutions could be a good way for the travel insurance industry to move forwards to increase customer satisfaction?