DBRS Morningstar: Summer of Mayhem Will Exacerbate Travel Insurance Market Concerns in 2022

Posted on by

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

The DBRS Morningstar group of companies consists of DBRS, Inc. (Delaware, US) (NRSRO, DRO affiliate); DBRS Limited (Ontario, Canada) (DRO, NRSRO affiliate); DBRS Ratings GmbH (Frankfurt, Germany) (EU CRA, NRSRO affiliate, DRO affiliate); and DBRS Ratings Limited (England and Wales) (UK CRA, NRSRO affiliate, DRO affiliate). For more information on DBRS Morningstar’s regulatory registrations, recognition and approvals group of companies, please see: https: // www.dbrsmorningstar.com/research/highlights.pdf. The DBRS Morningstar group of companies are subsidiaries of Morningstar, Inc. © 2022 DBRS Morningstar. All Rights Reserved. The information on which DBRS Morningstar ratings and other types of opinions and credit reports are based is obtained by DBRS Morningstar from sources that DBRS Morningstar believes to be reliable. DBRS Morningstar does not audit the information it receives in connection with the review process, and it does not and cannot independently verify that information in each instance. The extent of any factual investigation or independent verification depends on the facts and circumstances. DBRS Morningstar ratings, other types of credit opinions, reports and any other information provided by DBRS Morningstar are provided “as of now” and make no representation or warranty of any kind. Hereby, DBRS Morningstar disclaims any representation or warranty, expressed or implied, as to the accuracy, timeliness, completeness, marketability, fitness for any particular purpose or non -infringement of any such information. In no event shall DBRS Morningstar or its directors, officers, employees, independent contractors, agents and representatives (jointly, DBRS Morningstar Representatives) be liable (1) for any inaccuracies, delays, data loss, delays in service, error or omission or for any damages resulting therefrom, or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of the ratings and reports of rating or arising from any error (negligent or otherwise) or other circumstances or contingency within or outside the control of DBRS Morningstar or any DBRS Morningstar Representative, related or associated with the acquisition, collection, incorporation- collecting, analyzing, interpreting, communicating, publishing or transmitting any such information. DBRS Morningstar entity does not have an investment advisor. DBRS Morningstar does not provide investment, financial or other advice. Ratings, other types of credit opinions, other reviews and research issued or published by DBRS Morningstar are, and should only be construed as, statements of opinion and not statements of fact regarding eligibility on credit, investment, financial or other advice or recommendation to buy, sell or hold any securities. A report relating to a DBRS Morningstar rating or other credit opinion is not a prospectus or a substitute for information generated, verified and presented to investors by the issuer and its agents in connection with the sale of the important role. DBRS Morningstar may receive compensation for its ratings and other credit opinions from, in addition to https://www.dbrsmorningstar.com/disclaimer/ others, issuers, insurers, guarantors and/or underwriters of debt securities. DBRS Morningstar is not responsible for the content or operation of third party websites accessed via hypertext or other computer links and DBRS Morningstar is not responsible to any person or entity for the use of such third party website. This publication may not be reproduced, retransmitted or redistributed in any form without the prior written permission of DBRS Morningstar. ALL DBRS MORNINGSTAR RATINGS AND OTHER TYPES OF CREDIT OPINIONS ARE SUBJECT TO DISCLAIMER AND SOME LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AT https://www.dbrsmorningstar.com/about/disclaimer. MORE INFORMATION ABOUT DBRS MORNINGSTAR RATINGS AND OTHER TYPES OF CREDIT OPINIONS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGY, IS AVAILABLE AT https://www.dbrsmorningstar.com. Users may, via hypertext or other computer links, gain access to websites operated by people other than DBRS Morningstar. Such hyperlinks are provided for convenience only, and are the exclusive responsibilities of the owners of such websites. DBRS Morningstar does not endorse the content, the operator or the operations of third party websites. DBRS Morningstar is not responsible for the content or operation of such websites and DBRS Morningstar is not liable to you or to any other person or entity for the use of third party websites.