Middle East tensions highlight gaps in travel insurance for Singapore travellers

Follow our live coverage here.

SINGAPORE – The widespread disruption across global aviation triggered by the ongoing conflict in the Middle East has exposed gaps in standard personal and business travel insurance coverage, with most policies excluding war-related losses.

While some specialised business travel insurance does cover war and conflict, this comes at a cost that is probably too pricey for most companies.

Despite its limits, market watchers said personal and business travellers should still consider travel insurance for the peace of mind it offers in the event of an emergency.

Travel exclusions for war cover 

Airports in Dubai, Doha and Abu Dhabi are key stopover hubs for flights connecting Asia and Europe.

So when tensions hit and crippled air travel, many travellers found themselves stranded as airspace was closed and flights were cancelled or rerouted.

As costs from cancelled flights and extended hotel stays mounted, travellers found out, to their dismay, that their travel insurance policies did not cover claims arising directly or indirectly from acts of war or armed conflict.

A spokesperson for the General Insurance Association of Singapore (GIA) said that these events can lead to a large number of insurance claims being filed at the same time due to mass destruction.

“The scale and unpredictability of armed conflict creates risks that are difficult for insurers to price,” the GIA spokesperson added.

The spokesperson said that by excluding war-related claims, insurers are trying to keep premiums affordable for the standard travel risks.

Mr Mack Eng, chief executive of MSIG Singapore, said all insurance companies use reinsurers to manage these risks. He added that major reinsurers have war as a standard exclusion. 

Income Insurance broke with industry protocol when it announced on March 9 that it will cover trips to affected Middle East destinations, including Israel, Iran, Egypt, Qatar, Saudi Arabia and the United Arab Emirates.

Mr Dhiren Amin, the insurer’s chief customer officer, said the coverage applies to upcoming trips if the conflict is still ongoing in the 30 days before departure. 

He added that customers who were stranded abroad before the conflict started on Feb 28 can claim for the shortening of trip, travel disruption or travel delay, according to the terms and conditions of their policies. The benefits apply to eligible personal and business travel insurance policies which were bought before 3pm on Feb 28.

Mr Amin noted that customers must first seek refunds from their accommodation, transport or service providers. If they cannot get a refund, Income will reimburse them within the policy limits.

Mr Eng said any insurers that decide to cover war-related travel disruptions are likely to be self-insuring these risks.

“They are likely to bear the financial burden as reinsurers do not extend cover for standard travel insurance policies,” he added. 

Business travel with war cover

Most personal and business travel policies come with this standard exclusion for war and conflict.

Ms Jacklyn Tan, head of renewal and employee benefits at insurance broker Howden, said that a special clause can be added to some business travel policies to cover war-related risks. However, such coverage is specific and limited, so the risk of war will not be removed entirely.

She added that the premiums will cost more. “There is additional premium to be charged on top of the annual premium that the company is being quoted.” 

Ms Tan pointed out that not all clients will take up the special coverage. Even multinational companies with the budget will think twice if it is worth it, she said. 

Some companies include business travel coverage as part of their employee benefits for staff who are on long-term assignment overseas or who fly frequently for work.

In these cases, the corporate cover for travel falls under International Private Medical Insurance (IPMI), a type of health insurance covering medical evacuation, hospital stays, surgery and other types of medical treatment globally.

Ms Rachel Yin, regional high-end medical and post employment leader at Mercer Marsh Benefits, Asia, said that IPMI policies, like most personal and business travel insurance policies, typically exclude war and military conflict. This means losses directly related to war are unlikely to be covered.

She added that there may be additional extensions or clauses, such as “passive war extension” or “war buyback”, that can provide limited protection – for example, for accidental death or medical injuries sustained from collateral damage such as a missile strike. 

Read the fine print

The air travel chaos caused by this conflict is likely to increase travellers’ awareness of the need to check what is covered and what is not in their travel insurance, said the GIA spokesperson. 

Howden’s Ms Tan added that most consumers usually check the benefits first, but going forward, they should check what is excluded or not covered first.

She emphasised the importance of checking government travel advisories before booking any trip.

This is because if the situation is a “known event” at the time of buying the travel insurance, any claims related to it will not be covered.

Likewise for companies, Ms Yin from Mercer Marsh Benefits said, corporations should check their employee benefits and international medical cover to see if additional support is already built into existing policies.

She added that they should understand the exact coverage details of the corporate policy, including the exclusions and limitations. If need be, they can negotiate policy terms, such as optional extensions.

Travel insurance still has its benefits

That being said, travel insurance does have its benefits. The GIA spokesperson said that high-value costs, such as overseas medical treatment, emergency repatriation or third-party liability for injury or property damage, can come up to five or six figures.

Other common coverage areas include trip cancellation or postponement, and loss or damage to baggage and personal belongings. 

MSIG’s Mr Eng said even an emergency evacuation from a neighbouring country can cost tens of thousands of dollars.

He gave an example of an individual who fractured his leg while parasailing in Phuket and wanted to be evacuated to Singapore.

Evacuation costs, whether by commercial flight or private jet, can be substantial, he added.

Mr Eng noted: “When you buy travel insurance, you are buying peace of mind. You are also buying to ensure that if anything unfortunate happens, you do not feel any financial strain.”

He added that this is the same reason why people buy life insurance, so as “to provide peace of mind to family members by creating an estate for their loved ones”.