Cruise Insurance: Is covering a senior to cruise like insuring an 18-year-old to drive?

Forcing insurance companies to lower the cost of travel insurance for older cruisers was not a good idea, according to the country’s leading not-for-profit advocacy organisation for seniors.

National Seniors Australia general manager Chris Grice says that he understands and appreciates the concerns expressed in regards to the issue of affordability of travel insurance for the older traveller market.

But Mr Grice believes that any move to mandate or regulate insurers to significantly reduce their prices could backfire and ultimately drive insurers from the market.

For the past month Cruise Passenger has been inundated with complaints from elderly Australians about the rising costs of travel insurance.

One reader was quoted $10,000 for travel insurance for back-to-back cruises from North America to Iceland. Others have said that because of exorbitant insurance costs they were not booking future cruises.

All passengers who cruise internationally, or in Australia, must have insurance that covers them for Covid 19 complications.

Cruise Passenger readers have also complained that insurance offered through credit cards did not cover them for sailing on cruise ships in these times of Covid 19.

“Taking into account rising medical costs, the impact of COVID, repatriation costs (like airlifting a passenger off the cruise ship), and general claims frequency, mandated or regulating insurers to significantly reduce their prices, would not necessarily be in the better interests of our members,’’ Mr Grice said.

“The risk with that is that insurers withdraw from the market which is what we saw during COVID, they go back to days of applying age caps again or pre-existing conditions cover is curtailed, and that would not be a good outcome for older Australians and the travel industry including cruise operators.

“Our organisation has been an active participant in improving accessibility and the coverage available with travel insurance especially for older Australians.

“The challenge previously was finding insurers that would even cover older Australians for travel insurance and, or, cover them for pre-existing conditions.

“Through our involvement in general advocacy as well as our participation in the government sponsored Insurance Reform Advisory Group, improvements were made in regards to coverage access for older Australians.

“I am pleased to see that this access has improved thus enabling some older Australians to travel out of Australia that would not otherwise been able to do because of the financial risk associated with them not being protected should a health related issue occur whilst on holiday.

“In no way absolutely am I an apologist for the insurance industry, however the issue is a complex one and there are many factors that are impacting the cost of cover especially factoring in the pandemic.

“The availability of travel insurance as a product, the coverage provided, and the pricing for said product is determined by the risk associated with the customer to be insured.

“Insurers price their policies on the basis of risk and that risk is linked to the destination, the value of the trip, the duration of the trip, the age of the customer and the health considerations linked to that customer.

“Regrettably, we can’t avoid the fact that the number of health conditions that a person may have experienced or they are being treated for increases typically with age, and it is the health considerations that the insurer is most interested in as this is where the cost exists from a claims perspective.

“Health care costs linked to travel has always been expensive like in the United States where it costs over $25k per day for intensive care treatment, but with the expectation from consumers that they should be covered for COVID now as part of their insurance, insurers are now pricing this additional exposure as part of their policies.

“COVID has changed buying habits of older travelers where they are either catching up for lost travel time due to lockdowns, or they are thinking that they may not get a chance to travel again so we have seen average trip values increase and booking lead times increase which both impact insurance pricing as trip value is insured as part of the cancellation cover linked to the policy.

“Whilst we advocate on behalf of older Australians and our purpose is to represent their interests and call out ageism where it exists, I am somewhat more balanced in my perspective and response to the commentary that the affordability of travel insurance is ageist.

“As insurance is a risk-based product, we cannot avoid the correlation between age and health considerations which can and do flow through to a claim outcome just like insurers charge higher premiums like thousands of dollars (and substantial excesses) for an 18-year old to comprehensively insure their car versus a 65-year old which might cost them $650 approximately to insure, or the $10,000 premium that borrowers have to pay for lenders mortgage insurance which typically affects young borrowers compared to older more established borrowers that don’t.

“My point is that age is not the consideration when it comes to insurance, it is the history, the experience, track record or individual circumstances that apply.

Travel agent, and former national newspaper travel advice columnist, Kim Culyer says that travellers have few options when it comes to buying the right travel insurance.

“As a travel agent I strongly recommend all my clients are covered by an appropriate level of travel insurance,’’ Ms Culyer – who was Doc Holiday for five years in News Corporation’s Sunday papers – said.

“I encourage them to take a level of cover high enough to reimburse any costs they may incur as a result of unforeseen circumstances

“Post pandemic it is imperative you have a policy that includes Covid cover but there’s only a handful of companies currently providing this. It ensures you are covered for cancellation and incurred costs due to Covid related incidents.

“Pre-pandemic cruises were covered in general, now they must be specified and added to the policy –  incurring an additional fee.

“It provides cover for unused pre-paid excursions, missed shore visits and missed port connections. There’s also compensation for involuntary cabin confinement.

“Insurance is mandatory for any multi-night cruise both domestically and internationally. While Australian are covered under Medicare for medical treatment in Australia, they are not covered for cancellation fees and extra costs if they need to be quarantined.

“Some domestic cruises also enter international waters, so people need to check which policy they need.

“Some people are provided cover by their credit card. I urge people to read the PDS (product disclosure statement) very carefully because  often this is a basic cover and does not include Covid 19 or Cruise.’’

Cruise Passenger asked a leading bank that offers travel insurance as part of its Platinum and World Tier credit cards and a spokesperson confirmed that coverage did not include assistance for passengers who contracted Covid while on a cruise.

The spokesperson said that could be purchased separately from insurance providers.

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Peter Lynch, Publisher