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Cover-More feels heat as refunds surge

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Cover-More forecasts it will refund premiums for at least 250,000 travel insurance policies this year due to the coronavirus pandemic, while struggling with a slide in expected response times in handling claims and inquiries.

Head of Sales and Distribution Asia-Pacific Mike Stein says the Zurich-owned insurer is providing refunds for the travel period from when the Federal Government closed the Australian borders in March through to August.

Around 88,000 policy payments have been refunded to date, and the number is likely to climb to 250,000 and possibly higher, he told the House of Representatives Economics Standing Committee hearing yesterday.

“As the Government’s travel ban may be extended it is likely to include further months in there as well,” he said.

Last year, the average cost of a policy was $330, with wide variances according to the countries visited

Mr Stein says Cover-More has received 10,000 pandemic- related claims, has paid about 20%, declined 40% and the remainder are under assessment.

The pandemic has caused a dramatic increase in call volumes, and Mr Stein says customer notification timeframes have blown out from the 10 days required under the General Insurance Code of Practice to 13 days.

Cover-More issued a travel advisory on January 23, by which time it had assessed information about the virus was in the public domain and a reasonable person would have been aware of unfolding events, the parliamentary committee heard.

Mr Stein rejected suggestions from committee Deputy Chairman Andrew Leigh that its policies are now little more than junk insurance due to exclusions for risks causing the greatest concern for consumers.

Mr Stein said Cover-More policies continue to pay for medical costs, even for the pandemic, and cover a range of other circumstances, while not paying for travel cancellations or delays triggered by COVID-19.

People are still booking holidays for further ahead and taking out travel insurance, and it is looking at its offering going forward.

“Cover-More is actively exploring the development of products with our insurer Zurich, with a view to meeting the needs of our customers in the future travel environment,” Cover-More CEO Asia-Pacific Judith Crompton said.

“This will include a review of COVID-19 coverage where the risk profile is now understood and the cover is sustainable.”

Ms Crompton says a first step in the review will be provided in the context of the proposed trans-Tasman “travel bubble”.

Cover-More told the committee it has a 45% share of the Australian travel insurance market and 60% of its business comes from retail sales.