Reserve Bank of Australia changes affecting credit cards are shaking up travel cover and have led to warnings that consumers could unknowingly embark on trips uninsured. 

The RBA changes starting this month remove card payment surcharges and lower the interchange fees banks can charge, causing lenders to overhaul card-related offerings including travel insurance. 

RACV Travel Insurance manager Judith Gamble says many travellers could mistakenly assume they still have the same level of cover they've relied on in the past. 

“Several major banks have already reduced or removed complimentary travel insurance benefits, with more changes taking effect [last] week. Travellers shouldn't assume the cover they've relied on previously is still in place,” Ms Gamble said. 

The business, which provides cover underwritten by Tokio Marine & Nichido, has outlined a raft of changes made by NAB, Commonwealth Bank, ANZ, Westpac. 

Commonwealth Bank has also switched to XCover, a platform provided by Cover Genius and underwritten by Allied World Assurance Company for insurance activated after September 29. Insurance activated before then is provided by Zurich’s Cover-More. 

A spokesperson says the bank works with a range of organisations across its consumer finance business and arrangements evolve to help support customer needs.

“Our new insurance collaboration with XCover is designed to help deliver a simpler digital insurance experience for CommBank and Bankwest customers, while helping provide the protection and support they expect when they travel,” the spokesperson told insuranceNEWS.com.au.

Taylor Fry says in its Radar report released last week that the reforms will squeeze the “free” travel cover bundled with premium cards, which is a channel worth about 30% of Australia’s coverage. 

Travel insurance has remained profitable since covid, with combined ratios holding at just under 90% in Australian Prudential Regulation Authority (APRA) data, amid an operating environment affected by geopolitical tensions and cost-of-living pressures. 

The credit card-related changes are also a disruption to the sector and an opportunity to capture displaced customers, it says, while the market itself is changing. 

“Allianz Partners and IMG are acquiring Nib’s travel business, leaving Allianz and Zurich’s Cover-More with well over half the market, but new capacity is also arriving. Generali’s Europ Assistance has secured an APRA licence, and new MGAs are entering,” Taylor Fry principal Win-Li Toh says. 

Taylor Fry expects rates will remain broadly stable this financial year, with the market continuing to deliver combined ratios around the 90% mark.