The COVID-19 pandemic grounded the global travel industry for the better part of two years. Russia's war on Ukraine has sent flight routes into permanent detours. The US-Iran conflict closed airspace across the Middle East, stranding vessels and stranding plans. And yet, for all the upheaval reshaping international travel, the insurance product that travellers carry in their back pocket has barely changed.
That contradiction sits at the heart of a growing debate inside the global travel insurance industry - one that stakeholders like Carole Tokody (pictured) CEO of Southern Cross Travel Insurance (SCTI), are determined to push to the fore.
The industry she is challenging is formidable. Market leaders such as Allianz Partners - the travel assistance arm of German insurance giant Allianz SE - AIG’s widely distributed Travel Guard product, and Generali Global Assistance operate worldwide networks handling everything from trip cancellations to emergency medical evacuations. Chubb underwrites high-end travel policies across more than 50 countries, Tokio Marine serves as a major underwriter behind countless credit card travel protections across Asia and beyond, and even Berkshire Hathaway has staked a claim through its tech-forward Berkshire Hathaway Travel Protection arm. Together, these conglomerates command a sector that has, until now, changed remarkably little.
“This is probably my last chapter in the industry, and I really want to see us change the insurance offering to make it more relevant to travellers,” said Tokody. “The product basically hasn’t changed in the last five to ten years.”
That standard formula - emergency medical cover, trip cancellation or interruption, and lost or stolen luggage - was designed for a world in which major disruptions were the exception rather than the rule. The last five years have exposed just how much that world has changed.
“Given what we’ve seen in the last five years, there is a need to look at how we can better anticipate some of those events,” Tokody said.
The challenge for insurers is that the most consequential disruptions - wars, pandemics, geopolitical crises - are precisely the events that travel policies are structured to exclude. War exclusions and epidemic carve-outs are industry standard and for understandable actuarial reasons. But Tokody argues the industry’s response to those exclusions is too passive.
“You could never cover a full war product,” she acknowledged. “But what we can do is make customers more aware - improve alerting, keep travellers informed while they’re travelling.”
It is a subtle but significant shift in thinking: from insurance as a purely reactive financial product, to something closer to a real-time travel support service. The distinction matters not just for policyholders, but for brokers who increasingly field questions from corporate and leisure clients about what exactly their cover means when a geopolitical crisis erupts mid-trip.
“That’s where the segment needs to get to: making travellers conscious of what their policy covers and what it won’t, and what we can deliver in spite of that,” said Tokody.
The issue has a sharp practical edge. When the US-Iran conflict disrupted Middle East airspace, some travellers transiting through the region found themselves in a grey zone - not in a war zone per se, but in an area flagged by official government travel warnings that can trigger policy exclusions. In Australia, the travel industry body ATIA has lobbied the government over concerns that “do not travel” Smartraveller advisories for the Middle East may be too broadly drawn, potentially voiding cover for travellers on routes that simply transit the region.
The broader strategic challenge, Tokody suggests, is that the industry has not yet fully internalised the new frequency of major disruption. SCTI recently modelled its risk scenarios against historical patterns and reached a sobering conclusion.
“We used to see a major event every three years or so; now we believe we’re in a world where something is always happening and we’ve modelled the business accordingly," said Tokody.
For global insurers and the brokers who distribute their products, that recalibration has significant implications - not just for product design, but for how claims risk is priced and how policyholder communication is managed in real time. Shifting claims profiles, new destination patterns, and rising medical costs in high-demand markets like Japan are already reshaping underwriting considerations that, until recently, were largely stable.
Tokody’s prescription is as much about information as indemnity. In an environment where travellers are awash with AI-generated content of variable reliability, she sees authentic, research-backed guidance as a core part of the insurer’s value proposition going forward.
“Authentic content is going to win the day,” she said. “There’s so much inauthentic content being muddled together. Continuing to do research and provide genuine insights into what’s really happening - I think that’s going to be important.”
The travel insurance product offered by the big insurers has survived largely unchanged through some of the most volatile years in modern history. Whether it can survive the next five years without a fundamental rethink could be a question the industry can no longer defer.
