Insurance broker Lockton Australia (Lockton) has teamed up with global reinsurance and risk solutions provider Munich Re to launch Australia’s first parametric insurance solution for the travel industry.

In an interview with Traveltalk Magazine, Lockton explained that its new parametric insurance product has been designed to cover against losses from virus or disease outbreaks, protecting businesses and industries from financial crisis.

The product will be triggered when the World Health Organization (WHO) declares a future pandemic. The payouts can be used to fund financial loss from ticket sales, including:

• refunds;
• commission losses;
• repayments;
• staff salaries;
• entitlements and retention;
• debt principal and interest repayments;
• business operational costs such as rent; and
• other losses unique to individual businesses.

“With no pandemic insurance protection available during COVID-19, the travel and tourism industry was at the mercy of government handouts, many of which had to be fought for at every turn by the industry’s premier associations,” Rebecca Fleming, tourism and travel manager at Lockton, told Traveltalk Magazine.

Travel insurance complaints

Last month, the Australian Financial Complaints Authority (AFCA) revealed that travel insurance was the most complained about financial product under COVID.

From March 12, 2020, to May 6, 2023, AFCA received 17,403 COVID-related complaints about financial services products or services, accounting for 7% of all complaints it received over the period. Consumers bagged compensation or refunds of $21.6 million.

Among the COVID-related disputes, one in four (or 4,368) was about how firms had responded to consumers’ financial difficulties.