A travel insurer was entitled to use its war and violence exclusion to reject a claim for a cancelled cruise in the Red Sea after the tour operator cited “ongoing unrest” in the region, the industry ombudsman has ruled.

A Southern Cross Benefits policyholder had received a full credit for his cancelled cruise but sought to recover other expenses incurred, claiming under his multitrip travel cover.

The insurer rejected the claim, saying the cancellation was due to the Red Sea security situation and was excluded under policy terms relating to war, military operations and foreseeable acts of violence.

The claimant argued the cruise operator referred only to ongoing unrest, not war or violence.

But the Australian Financial Complaints Authority says that even though the cruise operator used that term, the situation in the Red Sea could not necessarily be defined that way.

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“It is a phrase the cruise operator elected to use; it does not mean that is what the situation in the Red Sea actually was/is,” an AFCA member said. “Further, I am not persuaded a cruise operator is best placed to categorise what the situation in the Red Sea was/is.”

The trip was scheduled for October 2024 but was cancelled that June.

AFCA says that, at that time, the US Navy was escorting ships in the region and was involved in conflict with the Houthis; Houthi ships were attacking vessels with links to Israel; the war in Gaza had flow-on effects on cargo routes in and around the Red Sea.

The ombudsman finds the situation amounted to “more than ongoing unrest” and fell within the policy exclusion around acts of foreseeable violence, acts involving military operations and war.

It has rejected the complainant’s assertion that Southern Cross breached its duty of utmost good faith.

“Insurance policies do not provide cover for all circumstances and the insurer is entitled to assess and limit the risks it covers” AFCA said.

See the ruling here.