Summer 2023 Travel Insurance Trends – Forbes Advisors

If you’re heading out on a summer trip, be prepared for turbulence. The airline industry continues to grapple with staffing shortages, and travel disruptions are expected to put summer travel in a recession. And cancellations are expected to continue to rise as airlines struggle to keep up with demand. Flight delays in the New York area are expected to jump 45% from last summer, according to the Federal Aviation Administration.

Delays and cancellations aren’t the only thing that’s happening this summer. Average travel costs this summer are about 7% higher than last year, according to travel insurance comparison firm Squaremouth.

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Summertime blues: more flight delays and cancellations

When it comes to summer vacation, you may have to endure plane troubles and pay more for vacations.

flight delay

By 2022, 23% of flights at the top 10 airports will be delayed. That number is up 5% from pre-pandemic 2019, when 18% of flights were delayed, according to flight-tracking site Flightaware.

The increase in flight delays won’t stop anytime soon. This is due in part to the Transportation Security Administration’s forecast that summer air travel in 2023 will exceed pre-pandemic levels. A shortage of air traffic controllers is already expected to cause significant delays (up 54%) in the Northeast Corridor this summer, inevitably causing chaos on the tarmac.

Travel delays were the top travel insurance claim last year, with the Federal Aviation Administration predicting significant travel delays in the summer of 2023.

Travel Delay Insurance will reimburse you for additional costs if your trip is delayed for reasons stated in your insurance, provided you have passed a specified waiting period (e.g. 6 hours) before benefits are applied.

“Fortunately, travel insurance may cover additional costs for meals, transportation and accommodation in case of long delays,” said Daniel Durazo, spokesperson for Allianz Travel. “Feeding children at the airport is never cheap, so it’s important to have travel insurance that includes travel delay coverage.”

According to SquareMath, half (50%) of travel insurance claims paid for summer trips in 2022 were for post-departure disruptions such as travel delays, trip interruptions and missed connections.

flight cancellation

Staffing and airline maintenance issues continue to hamper airline operations and cause flight cancellations. With these issues largely unresolved and pilot strikes at American, United and Southwest Airlines likely, cancellations are likely to continue to increase this summer.

Cancellations prior to departure accounted for 16% of paid travel insurance claims last summer, making them one of the most common travel insurance claims, according to SquareMass.

Adding to the confusion is the hurricane season, which begins June 1.

“Travel to the Caribbean, Mexico, and the states of the southern United States may be affected by adverse weather conditions. Flights may have to be canceled or delayed, and cruise ships may similarly have to be There might be,” said AIG Travel spokesman Scott Adamski.

Trip cancellation insurance covers prepaid, non-refundable travel expenses if you have to cancel your trip for the reasons stated in your policy, such as bad weather, aircraft mechanical failure, strikes, etc. For example, if you are forced to cancel your trip due to an airline strike, you can file a trip cancellation claim if you had travel insurance before the strike was announced.

Trip cancellation insurance does not cover all cancellation reasons. For example, if there is an air traffic control computer network outage and you wish to cancel your trip, you may not be eligible for the Trip Cancellation Benefit as this is not stated in our policies.

Top destinations for summer 2023

Summer vacationers are eager to travel abroad this summer. According to SquareMass data, 82% of travel insurance purchased for trips taking place between June 1, 2023 and his August 30, will be international trips.

World Nomads spokesperson Terra Baykal says Europe is the perfect place to visit this summer. “Forty-five percent of U.S. travelers who already have travel insurance for a summer trip plan to travel to Europe,” said Baikal, with Italy and the United Kingdom topping the list of European destinations. It is said that

“Of policyholders traveling to Europe, 63% purchased as solo travelers, 31% as couples and 6% as families. , which typically reflects the American holiday period.”

Summer vacation travel expenses soar further in 3rd year

The cost of summer travel has risen over the past three years. His average travel expenses covered by insurance purchased through Squaremouth will exceed $9,000 in 2023.

Squaremouth data shows that the average cost of summer travel in 2023 is 10% higher than in 2019. Travel costs this summer are nearly 27% higher than they were in 2021, at the height of the pandemic.

Average cost of summer travel by year

Kurt Carlson, a spokesman for Trawick International, said inflation and skyrocketing airfares are driving up travel costs. “Furthermore, demand for travel remains high despite a decline in travel industry supply due to ongoing labor shortages, and high demand but low supply unfortunately means that consumption For those of us that means we are seeing rising costs,” he says.

For example, the Hotel Lodging Association of America’s 2023 State of the Hotel Industry Report says that staffing shortages, inflation and supply chain disruptions continue to plague the industry. This could mean higher accommodation costs. For example, the average price of a hotel room is up 11% compared to last year, according to travel site Hopper.

Rising travel costs and increased disruptions are increasing travelers’ need to protect their investments with travel insurance, he said. “In modern travel, trip cancellations and interruptions, baggage delays, out-of-bounds connections are all important,” says Carlson.

Travel insurance payments also increased

“Travelers have banked more vacation and cash for their wanderlust over the past two years, allowing them to spend more on travel despite record levels of inflation. , many travelers can incorporate flexible remote work policies and travel,” said Duraso of Allianz.

The average amount spent on travel insurance for summer trips is up about 7% from last year and about 18% from 2021, according to Squaremouth data. Since travel insurance costs are primarily based on insured travel costs, as travel costs rise so does the amount spent on travel insurance.

Average spend on travel insurance for summer trips

Travel insurance won’t protect you from skyrocketing costs, but it can provide a financial safety net in case something unexpected happens and you lose money.

Pack travel medical insurance for summer trips abroad

With the majority of summer travelers traveling internationally, travel medical insurance is becoming more important.

“If you need a passport to travel, you need a travel medical plan,” says Lynn Pina, spokesperson for GeoBlue. GeoBlue recently conducted a Harris poll on international travel among more than 2,000 consumers.

“Most people spend hours planning the perfect trip, down to the details like itinerary, accommodations, flights, and whether or not their cell phone works, but the potential for medical malpractice abroad Few people consider that medical malpractice occurs much more often than people think,” says Pina. “Our Harris Poll found that 1 in 4 people have had a medical accident overseas. That number is 4 in 10 among those who have traveled abroad in the last five years.” climb to.”

In the same survey, when asked how they would pay for treatment abroad, 46% expected to use domestic health insurance, while another 18% said they were unsure how to do so, Pina reported. .

Those looking to rely on U.S. health insurance plans may be unaware of coverage gaps that can cause emotional and financial distress, Pina said.

Many employer-provided health plans in the country do not offer coverage abroad. Even with internationally covered health insurance, there can still be gaps in coverage and services, Pina said. For example, in many cases, you will need to prepay for medical expenses in a foreign country and then submit a reimbursement claim. In addition, medical care received abroad is generally not considered covered by US medical insurance and is expensive.

In addition, medically necessary medical evacuations are typically not covered by domestic health insurance, Pina said. “If a traveler needs medical evacuation, they will probably have to pay for it upfront and make the complicated arrangements themselves,” she says. “Depending on the medical situation and location, medical evacuation costs can range from $10,000 to over $100,000.”

More than a quarter (26%) of travel insurance payouts for trips last summer were related to medical emergencies, according to Squaremouth data. The $223,000 medical evacuation travel insurance claim was SquareMath’s highest amount claimed in 2022. The average medical evacuation insurance was about $83,000.

Summer travel for baby boomers is booming

While more baby boomers will travel this summer than they did in 2022 and 2021, the proportion of Gen X, Z and millennials who travel in the summer has declined for the second year in a row.

Baby boomers accounted for 40% of all travelers this summer, compared with 33% last summer and 29% in 2021.

“U.S. baby boomers are traveling to the Caribbean and Western European countries such as France and Portugal,” says Trawick International’s Carlson. The Mediterranean is no exception, he said, with Italy and Greece both popular destinations for this generation. “These are typically big trips, but the older millennial and his Gen X, who travel slightly cheaper, are still traveling in droves to Mexico, the Caribbean, France, Costa Rica will follow suit,” he says.