The winter school holidays are getting underway around Australia and travel insurers are enjoying the seasonal surge that comes with them. Policies are being snapped up by families chasing the sun in Bali, Fiji and Thailand and by skiers heading across the Tasman to Queenstown's slopes. There are also domestic travellers bound for local winter hotspots like the Great Barrier Reef for warm sun and snorkelling or the Snowy Mountains for the slopes. But whether the cover is for a short-haul international escape or a fortnight at Thredbo, this year the purchase comes with a nagging question attached. After the US–Iran conflict closed Middle Eastern airspace and stranded Australian travellers mid-year - and with the memory of COVID-19 still fresh - travellers are entitled to wonder: if something on that scale happens again while they're away, what will their policy actually do for them?
"Yes and no," he said. "I completely agree that our environment is changing and the products and services we provide absolutely need to adapt with that but I would note that we do a product review every year - looking at whether covers are fit for purpose - and we're continuously making changes."
Evolution in travel insurance has tended to be iterative rather than wholesale, nuanced tweaks that compound over time and can be hard to detect in any single period. Pandemic cover is his clearest example: a blanket exclusion before COVID-19 that has since become more nuanced, with cover now available for a broader range of pandemic-related scenarios. Conflict-related cover has similarly expanded around flight disruption and unforeseen medical events, even where the underlying war exclusion remains in place.
The data suggests travellers are feeling the strain. Research conducted by Quantum Market Research for the Insurance Council of Australia (ICA) and the Department of Foreign Affairs and Trade's Smartraveller program found 56% of Australian travellers are now avoiding countries they had planned to visit because of the global political environment, while 41% said it had made them less likely to go overseas at all. A June 2026 Finder survey found 26% of Australians had cancelled or postponed travel because of the Middle East conflict.
The industry's response to that conflict shows both the limits and the flexibility of the current product. The ICA has held its long-standing position that war and armed conflict are standard exclusions - the risk is effectively uninsurable at a commercially viable price. But several member insurers extended policy end dates for travellers caught in airport and airspace closures, so cover did not lapse simply because a disruption pushed a trip past its scheduled return.
McHugh's counterpart at Southern Cross Travel Insurance (SCTI), CEO Carole Tokody, has argued the sector's response has not gone far enough. Her firm's modelling concluding that "we're in a world where something is always happening."
"As insurers, we need to look at travel as an ecosystem rather than just a blanket insurance or risk mitigation product," McHugh said. "Travel insurance is not going to be the sole solution - the whole ecosystem, including airline partners, travel agents and accommodation providers, all need to engage in the solutions for customers."
The market is already moving that way. Zurich-owned Cover-More has built its app into an always-on safety monitor delivering real-time, location-based risk alerts, destination advice and tap-to-call emergency assistance - recently adding an AI-powered itinerary planner. Allianz Partners' own Allyz app offers geolocation-specific safety and security alerts alongside one-touch access to its assistance team.
For brokers and travel agents distributing cover, the shift redefines the job: the value of an intermediary in a disrupted environment is not simply placing the policy, but explaining what it covers, managing expectations before departure and guiding clients when things go wrong mid-trip.
McHugh is clear-eyed that disruption cuts both ways. "Things like Covid and global conflicts actually bring attention to the need for travel insurance," he said. "But as a consequence, increased travel increases exposure to pandemics, global conflicts and the like. You can't have greater awareness and greater penetration without picking up additional risks."
For the families heading off this week - whether to a Fijian resort or a Falls Creek chalet - that trade-off is the point. The product in their inbox is better than the one that met COVID-19 but the world it has to answer to keeps moving faster.
