Flight cancellations and surging omicron cases have kept hundreds of thousands of U.S. travelers home this week. But 2022 could be even more challenging, particularly if there’s a vaccination mandate for travelers. I spoke with Berkshire Hathaway Travel Protection (BHTP) President Dean Sivley about the future of travel.
We’re right in the middle of one of the most difficult travel periods in recent memory. We have omicron, bad weather and flight cancellations. Who should be considering a trip now, in your opinion?
Everyone has to make decisions based on their own health and circumstances. But if you’re ready and willing to travel, you have lots of options to fit your comfort level thanks to vaccines, required masks on planes and in airports, and testing.
There are still a lot of variables disrupting travel though, from ever-changing entry requirements to airline disruptions and rental car shortages. If you can be flexible with when, where and how you travel, now is a great time to be traveling.
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By “now” you don’t mean at this very moment, right?
When and where you go is obviously a personal choice, and we have not seen U.S. consumers let up on their pent-up vacation bookings since the omicron variant emerged.
If our purchases on bhtp.com are any indication, travelers want to travel and they want to go soon — meaning, on average, the next month. In fact, the volume of quotes on bhtp.com is up 20% since September.
What do you think is going to happen in 2022?
It looks like travelers will continue to be challenged in 2022 by trip cancellations and disruptions. There is no solution in sight for shortages of pilots and rental cars, and we continue to see ticketed events canceled at last minute due to COVID-19 outbreaks.
I also believe some of the travel trends from 2021, such as road-tripping, will continue to increase in popularity as we ease into 2022, given that a segment of travelers will want to continue avoiding crowds and the hassle of air travel as much as possible.
What if omicron gets worse?
If omicron or other variants continue to flare up throughout 2022, I do believe even “a vaccination mandate for domestic travel is possible, which could cause cause flight delays and other challenges at airports.
Do you think a domestic vaccination mandate for travelers is possible in the States? And would it be just for air travelers or anyone crossing state lines?
If the past 20 months has taught us anything, everything is possible. I’ve only heard of a domestic vaccination mandate referenced and thought of this in context to air travel, but we’ll leave that speculation to others.
A few weeks ago, you released your State of Travel Insurance survey, which suggested that while travel volume is reaching some of its highest levels since the start of the pandemic, consumers are cautious. And then we had the omicron variant. Has anything changed?
While omicron is definitely another cause for concern for some travelers with the unexpected rise in cases globally, consumers have been craving travel for so long that they are still willing to travel, especially in the new year.
Travelers have learned to adjust and be flexible with their plans. We’re hearing that as long as they can go somewhere, they’re going!
I think we’ll see only a temporary pause with omicron, and people will again figure out ways to travel. They just may be taking different types of trips than they had originally hoped for.
Your survey says 29% of respondents purchased travel insurance most of the time when they traveled in 2021, compared to only 7% who purchased it for most of their 2020 travels. That’s a more than fourfold increase. Why are more people buying travel insurance? Do you think that number is going to stay that high?
The study revealed several factors that are driving this increase in purchases. The top two reasons for purchasing more travel insurance were fears of disease epidemics, fears of flight cancellations and delays, and having a personal health condition. These were followed by more consumers than ever before acknowledging an increased understanding how travel insurance can save time and money, and knowing more now what travel insurance does and doesn’t cover.
It’s a sign of the times we’re living in. Travelers know they need to be better prepared should anything happen, and a big part of being prepared and having peace of mind is purchasing travel insurance.
As a consumer advocate, one of the things I’ve been concerned about is what I’d call travel insurance literacy — often, travelers don’t know what’s in their policy. So when they file a claim, they think they’re covered, but they aren’t. Your survey suggested that about one-third of the policyholders know what’s in their policy, which seems high. So, I’m wondering — are more people reading their policies now? And if so, why?
It does seem that people are paying closer attention, and they should. We want to make sure our insureds understand their coverage, and more importantly know they can and should call us with all of their “what ifs?” before purchasing.
Now more than ever traveling requires a lot more planning and contingency plans, particularly if you want to travel abroad. People are making the effort to educate themselves on not just travel insurance but on PCR test requirements for airlines, different countries’ entry requirements, vaccine mandates to attend events, etc.
There are also a lot of people who had to eat the cost of trips they canceled right at the start of the pandemic, and they are studying up on travel insurance to understand what is and isn’t covered if a trip gets canceled or disrupted.
BHTP has recently introduced new products, including specialty cruise insurance and policies for adventure travel. How are specialty policies selling, compared to your standard travel insurance products? Should we expect more specialization in the future?
BHTP prides itself on offering the right plan for the right type of travel. That’s why we developed an adventure plan for the extreme sport traveler, a cruise protection plan with cruise-specific coverages and limits, a driving vacation plan in the middle of a pandemic, and a luxury travel plan with the broadest coverage language to meet high-end vacationers’ needs.
Similar to when we rolled out our driving vacation plan, ExactCare Lite, to quickly adapt to the increased road-trip vacations during the pandemic, we will continue to adapt as the travel market needs us to. All of these plans are selling as we expected within their targeted niche markets, and we expect our cruise plan, WaveCare, to continue to take off as more and more cruise bookings occur over 2022.
But back to the current situation, with cancellations and COVID surges. Can travel insurance help with any of that?
Travel is a large purchase for most people. And like any large investment, you want to protect it, yourself and your traveling companions. Travel insurance can help mitigate many of the added expenses caused by covered delays, disruptions or cancelations.
And of course, COVID-19 is a major concern right now for most travelers. Many travel insurance plans like BHTP’s treat COVID like any other illnesses that could prohibit you from traveling. If you are forced to cancel due to being sick from COVID, in order to be eligible for benefits, when you submit your claim you’ll need to include a doctor’s note confirming your illness and that you are unable to travel. The benefits are the same regardless of whether or not the illness is COVID-19 or a different covered medical condition that prevents you from traveling.
What can’t travel insurance do?
What travelers must clearly understand is travel insurance does not cover fear or reluctance to travel out of concern for COVID. It must be a covered medical reason, signed off by a doctor, that forces you to cancel.
However, there is also “cancel for any reason” insurance that can provide cancellation coverage for just that — any reason. We always encourage our insureds to make sure they fully understand their coverages and call before you buy if you have any questions.
What kind of changes should we expect in travel insurance in the coming year?
While COVID has definitely changed the travel industry as a whole, it’s unlikely we’ll see any radical changes to travel insurance. But, I think we will see some continued innovation. At BHTP, COVID inspired us to custom tailor a new plan to road trip travel so customers weren’t paying for paying for coverage they didn’t need in our ExactCare product line. Some companies that temporarily stopped selling “cancel for any reason” policies are bringing back that coverage as well.
Other than buying travel insurance, what’s your advice for anyone planning a trip in 2022?
The key to 2022 travel is flexibility. Travelers should do their research on every aspect of their trip and have a plan A, B and C in place. I also recommend closely reviewing airfare and hotel booking options that are flexible and allow for refunds, travel credits and/or changes, even if those cost a little more.
For me personally, my family decided to push our big European, multi-country vacation as part of my son’s high school graduation to a couple of shorter domestic trips that offer nonstop flights. Like many travelers, we will continue to travel for vacations but have made adjustments to our destinations to help manage the risk of disruptions.