Will Travel Insurance Companies Be OK?

[jtwind]

We get trip insurance to protect ourselves in case the cruise lines go under as a result of coronavirus.  But if a few of the big players don't make it, and the travel industry in general takes a turn for the worse, will the insurance companies themselves be ok?

[Babr]

1 hour ago, jtwind said:

We get trip insurance to protect ourselves in case the cruise lines go under as a result of coronavirus.  But if a few of the big players don't make it, and the travel industry in general takes a turn for the worse, will the insurance companies themselves be ok?

It is my understanding that most travel policies are underwritten by companies that sell other kinds of insurance, not just travel policies. They may do less business in that sector  or eliminate it entirely, but I don’t think the major insurers will go out of business.

[skynight]

There may be some agents where travel insurance premiums are a good part of their business. Overall my take is that travel insurance is a small part of the ultimate underwriter's business model. When people don't travel there aren't many sales of travel policies, but they also don't pay many claims. Claims are where the bigger risk is for the underwriters. I would not worry about insurance companies being hurt from lack of travel. Insurance companies have much bigger concerns for example the CA fires, and hurricanes.  

[Babr]

Perhaps the OP was more concerned about the availability of travel policies going forward. That is a different question from insurers going out of business. 
 

I expect travel policies to change in ways that will address the risks of cruising in the time of Covid. Insurers will want to limit their exposure to known risks. Such changes will have to be approved by state regulators, and it will take time to enact. The point is that we may still be able to buy travel insurance when cruising resumes, but it may not offer the same kind of coverage we had before.

[Host Kat]

3 hours ago, jtwind said:

We get trip insurance to protect ourselves in case the cruise lines go under as a result of coronavirus.  But if a few of the big players don't make it, and the travel industry in general takes a turn for the worse, will the insurance companies themselves be ok?

 

@jtwind

 

Howdy!  

 

To help you out I have moved your thread to the Cruise/Travel Insurance forum where it will be on topic. Please browse through the thread titles on the forum looking for threads of interest. You will probably find your fellow Cruise Critic members have already posted questions and received answers that will be of interest to you.

 

Happy sails,

 

Host Kat 

[iamtrustworthy]

10 hours ago, jtwind said:

We get trip insurance to protect ourselves in case the cruise lines go under as a result of coronavirus.  But if a few of the big players don't make it, and the travel industry in general takes a turn for the worse, will the insurance companies themselves be ok?

Hi jtwind,

 

As Babr pointed out, travel insurance is a smaller part of the insurance companies' business. In addition, insurance companies are required to have very large financial reserves to protect their customers for a long time.

 

Steve Dasseos

[jtwind]

But sometimes, although these travel insurance companies have a recognizable name, couldn't they be an LLC that doesn't have the funding of that recognizable company?

 

For example, if there was a company called Allstate Travel that legally shared the same logo as the Allstate we all know, and is in fact related, could it be an LLC (limited liability company), and not share the financial strength of the Allstate parent company?

[klfrodo]

2 hours ago, jtwind said:

But sometimes, although these travel insurance companies have a recognizable name, couldn't they be an LLC that doesn't have the funding of that recognizable company?

 

For example, if there was a company called Allstate Travel that legally shared the same logo as the Allstate we all know, and is in fact related, could it be an LLC (limited liability company), and not share the financial strength of the Allstate parent company?

two thoughts

1. ALL insurance sold in the US is heavily regulated by each and every State Insurance Commission. Could a company slide what you are suggesting by someone? Sure. But then, the next State would figure out the game and deny that company the ability to sell in that State. Word would get out fast and they would be out of business.

2. Each and every insurance company buys insurance to protect themselves against major losses. Those companies are called "reinsurers".

[Philob]

Almost all insurance companies are rated by A.M. Best Company with an A to C scale. Insurance companies will post their AM Best rating prominently.

 

Go to AM Best's website and do a search for the company you are interested in. In the ratings of each company there's a line that will tell you the "ultimate parent" company or insurance group.  

 

Some states like California have an insurance "guarantee" fund. If a CA licensed company goes under the fund is supposed to make good on outstanding claims, but policyholder refund of premiums is at the back of the line. The insurance regulator will try to find a white knight to buy whatever is left.