The disruption of Ryanair flights was set to be the biggest shock the airline industry would experience in 2017. However the announcement that Monarch Airlines is to cease trading has superseded this, with over 750,000 bookings being cancelled.
Monarch's demise is believed to be related to the dip in travel following terrorist attacks on tourists in Egypt and Tunisia, as well as political unrest in Turkey, according to GlobalData a leading data and analytics company.
Daniel Pearce a Financial Analyst at GlobalData, comments: "The loss of travelers to these destinations forced Monarch to compete with low-cost airlines on routes to European countries – something the airline struggled to do effectively. The volatility in the value of the British pound has not helped matters."
It is believed that close to 50% of Monarch's customers will be protected by ATOL, allowing them to receive a full refund for the cost of their holiday. However, this means around half are unprotected, which is compounded by the fact that travel insurance often falls short of covering airlines going out of business.
This means the remaining Monarch travelers will have to pursue refunds through credit cards under Section 75 or, if they used a debit card, via the chargeback system. But many will struggle to claim refunds for other associated costs, such as car hire or accommodation which will surely lead to questions being asked of travel insurers.
The travel insurance industry has perennially suffered from a lack of customer awareness around policy terms, and is currently facing issues surrounding customer satisfaction.
Pearce continues: "The fallout from Ryanair's and Monarch's woes will not help the industry improve its reputation, even though insurers may argue that their policies clearly state which events are covered."
Travel insurance providers could seek to appease consumers by introducing new policies that not only cover airline collapse and flight cancellations, but that also protects related holiday expenses such as accommodation.
Pearce adds: "At the same time, insurers should explore methods to more effectively communicate and engage with consumers. If customers are fully informed about what is covered within their policy, then the travel insurance industry is less likely to suffer reputational damage when things go wrong."
Latest from iPMI Magazine
- FOCUS ON FRAUD: iPMI Magazine Speaks With Simon Cook, Head Of Technical Claims, CEGA Group, A Charles Taylor Company
- Tensions In The Gulf And Iran And The Impact On Insurance Premiums
- Association Of Medical Insurers And Intermediaries Welcomes 'More' New Members
- Sedgwick Appoints Wayne Cheng Chief Operations Officer For Asia
- Voyager Insurance Services Achieve 5-Star Rating With Moneyfacts