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Coronavirus: Travel insurance premium rockets by 550% as providers brace for huge payouts

Coronavirus: Travel insurance premium rockets by 550% as providers brace for huge payouts

Amid concerns over rising travel insurance premiums triggered by the coronavirus pandemic, a Lancashire couple have been told the cost of their annual policy has risen by 550 per cent.

David Hallam, from Todmorden, renewed his annual travel insurance with Aviva in May 2019 for £167, covering himself and his wife, Sheila.

But he has just received a renewal invitation from the company quoting a figure of £1,079, an increase of over £900.

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“This is for exactly the same cover with no change in our circumstances apart from being one year older,“ he said.

Travel insurers are predicting 400,000 coronavirus claims, mainly for cancellations. They expect to pay out at least £275m, dwarfing the £62m payments following the Icelandic volcanic ash cloud a decade ago.

While flight and holiday cancellations made by airlines and tour operators are recoverable from the provider, some holidaymakers have had to cancel trips because they fall into high-risk groups.

Mr Hallam said: “In view of the coronavirus pandemic, I was expecting an increase in the cost of travel insurance but certainly not an increase in excess of £900.

“We have been with Aviva for some years and have never made a claim – nor in fact have ever claimed on any travel insurance.”

When Aviva investigated the case, the firm discovered that an error had been made in pricing Mr and Mrs Hallam's 2019 policy.

A spokesperson for the insurer said: “When they renewed their policy in May 2019, the policy was changed from European to Worldwide cover. However, no adjustment was made for the change to cover worldwide trips and we incorrectly provided the customer with the cost of European cover.

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A man holds a pocket watch at noon, at an almost empty market near the Imam Ali shrine

Reuters

2/18 Bangkok, Thailand

Wat Phra Si Rattana Satsadaram (The Temple of the Emerald Buddha, part of The Grand Palace)

Reuters

3/18 Prague, Czech Republic

An empty street leading to the historic Old Town Square

Reuters

4/18 Washington DC, US

Lawn stretching towards the Capitol, home of Congress

Reuters

5/18 Jerusalem's Old City

A watch showing the time in front of Damascus Gate

Reuters

6/18 London, UK

The Houses of Parliament seen from Westminster Bridge

Reuters

7/18 Wuhan, China

Empty lanes in the city that saw the first outbreak of disease

Reuters

8/18 Havana, Cuba

The Malecon road and esplanade winds along the city's seafront

Reuters

9/18 Cairo, Egypt

A little busier than elsewhere: midday traffic in Tahrir Square

Reuters

10/18 Berlin, Germany

The Brandenburg Gate, the only surviving city gate in the capital

Reuters

11/18 Caracas, Venezuela

Bolivar Avenue, opened in 1949 and the site of many demonstrations and rallies

Reuters

12/18 Moscow, Russia

Spasskaya Tower (left) on the eastern wall of the Kremlin, and St Basil's Cathedral

Reuters

13/18 Istanbul,Turkey

The harbourside Eminonu district is usually buzzing with activity

Reuters

14/18 New Delhi, India

Rajpath, a ceremonial boulevard that runs through the capital

Reuters

15/18 Amman, Jordan

The Roman amphitheatre that dates back to the 2nd century AD

Reuters

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The main concourse of Grand Central station in Manhattan

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Maidan Nezalezhnosti, the site of many political protests since the end of the Soviet era

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The odd walker out in the midday sun on Ring Road Central

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“This error meant that last year’s premium was substantially lower than it should have been.

“They also made a change during the year to increase the length of a single trip to 45 days, which would also account for a higher premium at renewal.

“We understand that this year’s price seems much higher than the amount they paid in 2019. Although that price was incorrect, we are offering to reduce this year’s price to the equivalent price for last year: £715.”

Insurers have faced rising travel claims costs in recent years, partly as a result in the slump in sterling following the decision to leave the European Union.

Health care costs have risen sharply, with travel premiums increasing across the industry.

The Aviva spokesperson said: “To help manage price rises, we have been increasing premiums gradually at renewal to bring them in line with the price of an equivalent new policy.”

Aviva has paused the sale of new travel insurance policies as the coronavirus pandemic continues.

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