A travel policyholder whose cruise was cancelled because of conflict in the Red Sea has been denied a payout after his insurer showed the cancellation fell under its war and violence exclusion.

The cruise was scheduled for October last year but was called off several months earlier due to “ongoing unrest in the Red Sea”.  

The holidaymaker was given a credit for the value of the cruise but said he had to change his travel plans and incurred additional costs.   

Insurer Southern Cross said its policy would not respond to losses caused by war and violence, including “acts of foreseeable violence” and “acts involving military operations”. 

It said the cruise company’s reference to unrest in the Red Sea was related to conflicts in the Middle East, including Israel’s attacks on Gaza and Houthi vessels targeting ships in the region. 

The insurer noted the customer was advised before the planned trip that they would not be covered if a regional conflict led to cancellation.  

The claimant told the Australian Financial Complaints Authority it was unfair to find the cruise company’s reference to “unrest” fell under the definition of war and violence.   

He said there was no evidence cruise ships were being targeted in the area, which had seen only sporadic attacks on cargo vessels.  

AFCA notes that when the cruise was cancelled, US warships had been escorting vessels in the region and engaged in clashes that killed several Houthi crewmembers. 

The authority says many shipping companies have avoided the region due to the threat, which it says relates to the Houthis’ hostility to Israel and its war in Gaza.  

“I am persuaded the situation in the Red Sea region is more than ongoing unrest,” an AFCA ombudsman said.   

“This is because the events involving the US Navy could reasonably be considered as military operations and/or acts of foreseeable violence. 

“I am also persuaded the ongoing attacks by the Houthi fall within acts of foreseeable violence.”  

See the ruling here.

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