Allianz Partners has told Insurance Business that clients caught in the Nepal flood disaster do not need a specialist natural disaster upgrade for their travel cover to respond. The insurer's Australia and New Zealand divisions both confirmed they have policyholders in the affected region.
That answers the question likely on the minds of many travel insurance professionals since the flood struck on Wednesday - whether standard policies leave a gap where a catastrophe strands an uninjured traveller, or whether an adventure or disaster extension was required. On Allianz's account, for travellers on ordinary tourism itineraries, no extension is needed.
Kevin Blyth (pictured left), managing director of Allianz Partners New Zealand, put it without qualification in written responses.
"Our customers do not require a specific natural disaster upgrade for travel insurance cover relating to an unexpected natural disaster," Blyth said.
One scope note belongs alongside that. Blyth's position was given in the context of customers who, in his words, were undertaking typical tourism and travel activities and were not participating in specialist adventure activities requiring additional cover. It is not a statement about high-altitude trekking, which matters because September to November is peak Himalayan trekking season and the damaged corridor carries the access routes. Brokers with trekking clients should confirm the position rather than assume it extends.
The practical consequence for intermediaries is narrower than the event's profile suggests. Most retail travel insurance in Australia and New Zealand is bought direct or through travel agents, so the exposure sits mainly with brokers handling corporate travel programmes and the smaller number writing retail travel. For those, the following applies directly.
With the product question settled, the operative test is timing, and Blyth stated the principle in a single line.
"Once an event becomes known, it is no longer considered unforeseen," he said.
Travel insurance responds to the unforeseen. This flood is now a documented, globally reported event, which splits the client base cleanly. Clients who bought before Wednesday hold cover that may be engaged. Clients buying now do not, for this event, whatever product they select.
That turns an advisory problem into a documentary one. Inception dates should be established and recorded now for every client with a Nepal itinerary because that date is the first thing an assessor will ask for. Any client enquiring about Nepal cover today needs to be told in writing what the policy will not do - a conversation that is considerably easier before a booking than after a declinature.
A second timing trigger is worth checking. Many policies key cancellation entitlements to a change in government travel advice rather than to the event itself, which makes the current Smartraveller and SafeTravel positions on Nepal a live variable rather than background detail.
The scale of the event has continued to escalate. According to ABC News reports on Thursday, at least 160 people were killed and at least 1,500 are missing. Almost 500 foreigners from 28 countries are among those missing, including 34 from Australia, according to Nepal's embassy in India. New Zealand does not appear in this embassy's national breakdown and the Ministry of Foreign Affairs and Trade has not confirmed reports that five New Zealanders are unaccounted for.
Brokers hoping to pass a blanket assurance to clients will not find one and Blyth deliberately did not offer it.
"We assess each and every claim on its individual circumstances, as there are many variables," he said.
Set against the no-upgrade statement, that defines the shape of the position: the product is not the obstacle but the outcome is not settled in advance. Cover being engaged is also not the same as a claim paying in full. Evacuation sub-limits, cancellation caps and the documentary standard for proving a loss all sit between the two and those are the terms worth reading before a client is told anything reassuring.
The defensible message to a client is therefore a narrow one and worth getting right. Cover is likely to be engaged for a pre-event purchase. No disaster upgrade is required for standard tourism activity. The claim will turn on its own facts.
Allianz Partners - and likely other travel insurers - are currently reaching out to policyholders in the region.
"We have identified customers currently travelling in the affected region and are taking proactive steps to contact them and provide details of our 24/7 team for support if needed," said Damien Arthur (pictured right), executive head of travel at Allianz Partners Australia. Blyth described the same work in New Zealand, with policyholders in or travelling through the region identified and contacted to check on safety and establish whether emergency assistance was needed.
For a broker taking an anxious call this week, that is the useful thing to know: route the client to the assistance line rather than attempt a coverage opinion. The coverage questions will still be there next week and by then the purchase-date test will be unarguable.
