Travel insurance complaints soar 157% on the back of coronavirus

Thousands of angry and frustrated Britons have complained that their travel insurance failed to pay out when their holidays were cancelled or cut short by the coronavirus, new figures suggest.

The Financial Ombudsman Service said it had received 2,561 travel insurance-related complaints between July and September this year, accounting for 3.7 per cent of all 68,735 new complaints it received.

This was up 157 per cent from 998 between April and June, and the Ombudsman said two-thirds of the new complaints it received were related to the coronavirus.

Take-off: The number of travel insurance complaints made to the Ombudsman rose from 998 between April and June to 2,561 between July and September

‘The vast majority of these complaints are about claims being declined or delayed’, a FOS spokesperson said.

The rise in complaints about travel insurance helped push the number of overall complaints it received up by 19 per cent compared to the previous three months and by a fifth on the same three months in 2019.

The delayed deluge in coronavirus-related complaints is likely due to the fact that those who had holidays cancelled in March and April due to the pandemic first tried to get their money back through their insurance company, airline, travel agent or credit card provider, before turning to the Ombudsman. 

Just 29 per cent of travel insurance complaints were coronavirus-related between April and June, the FOS said. 

Consumers have six months to complain to the Ombudsman after they have received their ‘final decision’ from their bank or insurance provider, which should be received within eight weeks. 

Credit card complaints also rose by 26 per cent between July and September compared to the previous three months to 3,828, the FOS added.

The new complaints figures come two and a half months after an earlier report from the FOS found close to a quarter of the more than 3,500 coronavirus-related complaints it had received from consumers between March and August were to do with travel insurance.

Again, it had said the ‘majority of complaints’ were ‘about how insurers have been handling claims for cancelled holidays as a result of coronavirus’.

In August the Ombudsman said 23% of the more than 3,500 coronavirus-related complaints made since March were to do with travel insurance

This is Money has been inundated with emails and messages over the last eight months from readers struggling to obtain refunds for holidays which were either cancelled or could not go ahead due to restrictions imposed as a result of the pandemic.

Gareth Shaw, head of money at consumer group Which?, said: ‘It is clear from the significant increase in complaints referred to the ombudsman that many customers believe firms are not doing a satisfactory job of resolving them. 

‘Customers told Which? that some firms have not been handling their claims acceptably, with some people enduring excessive delays for a response, including waiting hours to be connected on the phone.’

The soaring number of complaints made to the ombudsman also appear to fly in the face of official guidance from both the FOS and the Financial Conduct Authority that insurers should take into account the exceptional circumstances of the pandemic.

Guidance initially published by the financial regulator on 19 March said insurers ‘must treat customers fairly’ when handling claims. 

It said: ‘This means providing reasonable guidance to help a policyholder make a claim, not unreasonably rejecting a claim, and settling claims promptly.’

However, it published updated guidance at the start of October once again stating ‘insurance firms should treat their customers fairly and consider what is in the consumer’s interest’, suggesting this guidance is not being acted upon.

Andrew Hagger, founder of personal finance site Moneycomms, said: ‘I’m not surprised to see this hike in travel insurance complaints as the coronavirus pandemic has caused huge problems for all elements of the travel industry, including associated services such as insurance.’

But he said confusion was also to blame, with consumers potentially unsure who to turn to for a refund for a cancelled trip.

‘Some people had probably assumed that their travel insurance would help them recover monies paid when flights and holidays were cancelled, but not all travel insurance cover is the same’, he added.

‘Like most things in life the more you pay the more comprehensive your product is. Confusion has been rife when it comes to obtaining refunds, some holiday firms and airlines have been slow to pay out which has seen travellers turn to their credit card company and or insurers for assistance.’

The FCA recommends consumers talk to their holiday provider, be it an airline, hotel or travel agent, first when they are looking for a refund, before turning to their credit card provider or travel insurer.

A spokesperson for the FCA said: ‘We recognise that coronavirus is creating additional pressures on firms but we have been very clear that if consumers approach their insurer to make a claim, then the insurers should recognise the exceptional circumstances customers may find themselves in and treat them fairly.’

The spokesperson for the Financial Ombudsman Service added: ‘We expect insurers to treat their customers fairly during these unprecedented times. 

‘If you’re unhappy with your insurer you should get in contact with our service and we’ll see if we can help.’

This post first appeared on Dailymail.co.uk