EIOPA Travel Insurance Thematic Review: A Warning To The Travel Insurance Industry

Author:Mr Anthony Perotto, Guido Foglia and Michele Zucca
Profession:Nctm Studio Legale

In a report published on 9 October 2019 - called "Thematic Review on Costumer Protection Issues in Travel Insurance" - EIOPA expressed its concerns regarding several consumer protection issues detected in the European travel insurance market.

In particulars, such concerns regards the rising commission applied by insurance intermediaries, the exploitation of behavioral biases when selling online travel insurance policies and the potential erosion of product value and features. Also insufficient cover, denied claims, unclear and conflicting terms and conditions have come to light as general trends in disfavor of consumers.

EIOPA detected that such risks have been increasing also due to new market players selling travel insurance products online as an ancillary activity (such as airline and ferry companies, price comparison websites, websites, aggregators, banks, supermarkets...).

In addition, EIOPA found a significant risk that high number of consumers could be harmed by the potential high degree of dismissed claims due to no pre-contractual medical screening. In this regard, the report estimates that around 70% of insurers do not include pre-existing medical conditions in the coverage of travel insurance products.

A Warning to Insurers and Insurance Intermediaries to Tackle High Commissions for Their Products

As a result, EIOPA issued a warning to the travel insurance industry as a supervisory response on the issues found. In particular, EIOPA expects all market participants to fully comply with the IDD; accordingly they are asked to:

review their business model which were found not consistent with the fundamental principles set out by the IDD, due to the "disproportionately high commissions" taken by insurance intermediaries across all distribution channels and the "very low claims ratio"; assess their distribution agreements to ensure that they are capable to act fairly and professionally in compliance with the best interest of their customers; ensure that, even where travel...

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