Massachusetts Sen. Ed Markey is asking the $3 billion per year travel insurance industry for answers, saying many consumers never receive the coverage they pay for.
Markey, a Democrat, recently released a report which cites worrying figures on claims and exceptions. According to CBS, a AAA study showed that about 40% of Americans “are likely” to purchase protection for international flights. Reasons to buy a policy are varied, with fear of cancelation at the forefront. Others worry they may fall ill, get injured or laid off before embarking on a planned vacation or business trip.
My office’s investigation reveals that travel insurance is being aggressively pushed onto customers but it often leaves them without the security they thought they bought and without their money. These plans are just another way for airlines to charge passengers more to get less. pic.twitter.com/ndqSI2pqjD
— Ed Markey (@SenMarkey) August 21, 2018
CBS spoke to Laura Tropiano, who planned to take her husband Matt on a trip to Europe for their second anniversary.
All in total, the couple spent close to $1,100 for a round-trip between the two continents. Even though Tropiano wasn’t expecting to fly for a year, she decided to buy insurance through the airline.
“I just had a feeling that this time we’d need it and it wasn’t that expensive,” she said. “So about a month after we book this trip, I find out that I’m pregnant with my daughter, and she’s due October 21 and our return flight to come back from Europe was October 19, so naturally you can’t fly when you’re that pregnant.”
But as CBS reports, Tropiano’s insurance said they couldn’t cancel and still expect to be reimbursed: her policy only covered illness, not pregnancy. Her claim was denied.
“The only thing skimpier than airplane legroom is the coverage of these insurance policies,” Sen. Markey said.
Markey’s review found that almost every U.S.-based airline and travel service asks customers to choose whether they’d like insurance before being allowed to complete a purchase. The report found “questionable travel insurance marketing practices for policies that offer minimal coverage and often erect hurdles to the payment of claims.”
Many third-party policies might include waivers for customers who choose to engage in ‘risky’ activities abroad—exemptions which can range from riding motorcycles and skydiving to simply renting a car.
“Customers are being tipped upside down, money is shaken out of their pockets, and it’s split between the airlines and the insurance companies, and it’s just plain wrong,” Sen. Markey said.
Only two companies underwrite policies for the brunt of America’s largest air carriers, says CBS. While the U.S. Travel Insurance Association says their office wasn’t contacted by Markey, they recommend “that travelers fully understand the coverage options they are purchasing to make sure it fits their needs … The purchase of travel insurance is voluntary.”
Markey’s asked AIG Travel Guard and Allianz Global Assistance, which sell policies for a dozen airlines.
A spokesperson for the travel industry’s lobbying association told The Washington Post that she couldn’t speak to the specifics of various policies. However, she did note that consumers have the option of purchasing fully refundable tickets from airlines—tickets which offer last-minute flexibility but can cost significantly more than an ordinary fare.