Emirates is developing its own travel insurance product to persuade passengers to fly into or through Dubai. Multiple governments continue to advise against travel to the region more than three months after the Middle East conflict began.
In an interview with the Financial Times, Emirates president Tim Clark said the carrier is working with insurance companies to offer a “reasonably priced” product. It would guarantee repatriation regardless of whether the return flight is on Emirates or another airline.
The move addresses a gap that has left travellers unable to obtain standard cover for trips to or through the Gulf.
“I think one of the big concerns is that if they get caught overseas and they can’t get back,” Clark told the Financial Times. The group is working with insurers “to do the right thing.”
With several countries still issuing no-fly recommendations, standard travel insurance policies have been voided for Gulf-bound trips.
About 40,000 passengers a day are still transferring through Dubai’s airport. This figure is down from roughly 100,000 before the conflict, but the number is “growing at pace,” Clark said.
Once a government travel advisory is issued, most standard travel insurance policies treat new bookings as a known event. War and conflict exclusions are then applied to subsequent claims.
Specialist cover remains available but is typically written on tighter terms and at higher premiums by niche high-risk insurers. The result has been a consumer protection gap that is only becoming apparent to most travellers at the moment of claim.
This gap is compounding a wider market stress. Industry analysts say the travel insurance market faces both a product design and a disclosure problem. Resolving it through policy reform and litigation will take years. The claims, however, are not waiting.
Reports indicate Emirates is paying roughly $100,000 per week in additional premiums to cover its entire fleet in and out of the region. One insurance executive described that deal as “outrageously low.”
Rival carriers are being quoted between $70,000 and $150,000 per individual flight landing in the Gulf.
Some London flights are “bursting at the seams” despite government travel warnings, Clark told FT. This volume of uninsured travel represents both a risk management problem and a commercial opportunity for insurers willing to price the exposure.
On the airline’s finances, Clark said Emirates reported a profit of $6.3 billion in the 12 months to end of March. This figure would have been $7 billion without groundings during March.
The airline was well ahead of its loss forecast for the first quarter to end of June. Clark said breaking even for the full financial year to 31 March would be acceptable as long as it remained cash-positive.
The conflict has doubled jet fuel prices, which Clark predicted would force a complete rethink of the global oil distribution market. He said Emirates remained committed to its A380 fleet regardless. Clark described the aircraft as “an enormous cash generator and profit generator.”
