Industry touts travel insurance amid swine flu uncertainty

A nervous travel industry is bracing for round two of the H1N1 swine flu pandemic, and the industry’s anxiety, in turn, is feeding a growing reliance on travel insurance.

Still reeling from the catastrophic consequences of the outbreak in Mexico last spring, followed by a relatively quiet summer, the industry is anticipating potential challenges that range from minimal to apocalyptic.

The World Health Organization has continued to advise against restrictions on travel. But the industry still faces myriad threats and challenges as the number of confirmed H1N1 cases and deaths worldwide keeps growing.

Without knowing precisely how H1N1 will play out in the coming weeks, the various travel protection plans and travel insurance policies currently available are being touted as travelers’ first and only line of defense for cancellations or changes in travel plans that result either directly or indirectly from swine flu.

Typical travel insurance, with coverage for cancellation, trip interruption and medical care, will come into play just as it would with other illnesses, with one exception, said Beth Godlin, executive vice president and chief sales and marketing officer in the U.S. for Access America.

If an insured traveler becomes ill before travel, he or she is covered when canceling, but if the traveler becomes ill while traveling, the insurer would not necessarily be able to help provide immediate transportation home if airlines refuse to allow sick passengers to board.

Godlin said trip interruption coverage typically covers the difference in airfare, if it increases by the time the insured traveler can fly, and additional hotel costs up to the policy maximum. The medical coverage applies as with other illnesses, up to each policy’s maximum.

However, Godlin cautioned, customers cannot collect if they cancel a trip because they are afraid of contracting the flu.

That is why Dan McGinnity, vice president of Travel Guard, said that anyone traveling to a destination that might be susceptible to an outbreak is strongly recommended to purchase "cancel for any reason" protection, which he said costs about 40% more than a standard plan.

"Most standard plans would not include coverage simply for fear of traveling to an area, like Mexico last May," McGinnity said. He added that cancellation due to a travel warning issued by the Centers for Disease Control and Prevention is also not covered by standard protection plans.

If someone is quarantined for exhibiting flu symptoms, as was the case with American tourists in China last May, Travel Guard’s trip-interruption benefits would cover any additional expenses incurred, such as lodging, airfare and the nonrefundable portion of the trip the traveler was not able to use.

McGinnity said that he had not been hearing that travelers were expressing a lot of fear about swine flu.

"With the vaccine available, the actual risk is being somewhat mitigated," he said. "We haven’t seen a lot of concern addressed from our travel agent partners up to this point."

Tour operators and packagers with "cancel anytime for any reason" plans are encouraging travelers and agents to consider those plans precisely because they allow people to cancel if they are worried about traveling because of swine flu outbreaks.

For a company like Pawtucket, R.I.-based Collette Vacations, which reimburses customers out of its own pocket, pushing such plans poses a risk in the face of a pandemic that could affect a large percentage of the population.

If there is suddenly a big uptick in flu-related cancellations, "that would be a bad day," said Collette CFO John Galvin. But he added that after 9/11, the company refunded $30 million to its customers.

So, if there is a rush of flu-related cancellations, Galvin said, "We don’t want that to happen … but it’s not an issue. We’d be fine."

Sallie Rawlings, senior director of corporate communications for Travel Impressions, which does a fair amount of business in Mexico and was affected by the cancellations there following the spring outbreak, acknowledged "there is a possibility for more cancellations" as flu season continues.

But, she said, "The most important thing is that we want people to feel comfortable about their travel." Travel Impressions has long offered a "cancel for any reason" travel protection plan, which allows travelers to cancel up until their original scheduled departure date.

The company’s post-departure travel protection plan, which includes medical protection, trip interruption, trip delay and baggage protection, is underwritten by the National Union Fire Insurance Co. of Pittsburgh and administered by Berkely-Care.

But the predeparture "cancel for any reason" waiver, which allows travelers to receive a full refund minus the cost of the plan, is provided by Travel Impressions.

The bottom line, Rawlings said, is that "we have the responsibility to make the end-to-end travel experience as easy and as great an experience as possible. The risk is worth it."