Financial Ombudsman talks about the nuances of travel insurance after shutdown of flights to Turkey and Tanzania
According to Financial Ombudsman Svetlana Nikitina, Russian tourists will be able to get back the cost of travel insurance for failed tours to Turkey and Tanzania because of the air traffic shutdown only if it is provided by the particulars of the insurance contract.
The current rules allow consumers to cancel an unnecessary insurance policy and refund the premium or part of it within a ‘cooling-off period’ of at least 14 days. However, as Svetlana Nikitina points out, this rule does not apply to travel insurance contracts. «As a consequence, the consumer has the right to demand a refund of the premium paid upon cancellation of the contract only in cases where this possibility is provided in the insurance contract itself,» says the Financial Ombudsman.
She noted that a number of financial institutions have publicly stated that, regardless of the contractual terms and conditions, they are ready to refund the premium paid for travel insurance policies for trips failed due to the introduction of restrictions. «Financial institutions have made advances to policy-holders and have demonstrated a customer-oriented approach. This behaviour of the market participants has a positive impact on customer satisfaction with insurance services and, in general, on the level of protection of consumers of financial services,» continued Svetlana Nikitina.
Speaking about insurance payments under travel insurance policies, Svetlana Nikitina noted that the policy often includes a trip cancellation risk. As a rule, it is associated with the specific events mentioned in the rules or terms of insurance. «According to this risk an insured event can be, for instance, hospitalization of the insured or visa denial. Then the policy-holder has the right to claim the insurance indemnity if he or she fails to travel for these reasons,» Svetlana Nikitina went on.
If the terms of the contract do not provide for insurance against the risk of travel cancellation as a result of air traffic shutdown, then this is not an insured event, and therefore the insurance payment will not be made. Such a risk can be insured separately.
If a consumer believes that their rights under the travel insurance policy have been violated, they have the right to apply for protection of their rights to the Financial Ombudsman Service, where the appeal of the applicant will be examined free of charge and within 15 working days (the consumer must observe the claim procedure before applying to the Financial Ombudsman: first, send a mandatory request to the financial institution against which the consumer has a claim, stating the nature of their claims).
Consumers of financial services sent 413 appeals to the Financial Ombudsman in 2020 regarding insurance policies for citizens travelling outside their permanent place of residence. «The share of such cases in the total volume of appeals is low and amounted to only 0.2%. Consumer activity in this segment was affected by the pandemic and the travel restrictions imposed. In 2021 we also do not expect an increase in the number of appeals in this category of disputes, but in the future, as tourist activity recovers, travel insurance disputes may take a significant share in the total number of appeals for non-motor insurance,» Financial Ombudsman Svetlana Nikitina added.