DBRS Morningstar: Summer of Mayhem Will Exacerbate Travel Insurance Market Concerns in 2022
NEW YORK–(BUSINESS WIRE)-DBRS Morningstar has published a commentary assessing the impact of recent massive flight cancellations and delays on the profitability of travel insurance and the overall credit profile of insurance companies.
Key highlights include the following:
The rapid increase in travel demand has hit airlines with an unprecedented number of canceled and delayed flights due to severe staff shortages, increased operational requirements, and fleet reductions over time. of pandemic.
This material increase in flight cancellations and delays, as well as baggage losses, is likely to make travel insurance unprofitable in 2022, exacerbating the problems the travel insurance business has experienced since its inception. of pandemic.
Despite the large increase in travel insurance losses, the overall impact on the financial strength of insurance companies must remain manageable due to their high degree of diversification.
“With many airlines and airports around the world facing very high levels of flight cancellations and delays in recent months, we expect the travel insurance industry to experience combined ratios of more than 100% due to increasing insurance losses, making this line of business unprofitable for. most insurance companies by 2022, ”said Marcos Alvarez, Senior Vice President and Global Head of Insurance. “This will include the problems the travel insurance business has experienced since the beginning of the pandemic, as insurance companies were first hit by an increase in claims and then by the collapse of global travel, which greatly reduced the demand for this product. ”
To read the full report, click here: https://www.dbrsmorningstar.com/research/399715/summer-of-mayhem-will-compound-the-travel-insurance-markets-woes-in-2022
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