Which insurance is proving vital amid global IT outage?
Which insurance is proving vital amid global IT outage? | Insurance Business Canada
Travel
Which insurance is proving vital amid global IT outage?
Clue: it’s not cyber cover
Travel
By
Nicole Panteloucos
A global IT outage on Friday, caused by a defective software update from US-based cybersecurity firm CrowdStrike, left systems running on Microsoft Windows glitching and displaying blue-screen error messages. The outage affected numerous sectors, including investment banks, media outlets, airlines, and airports.
With over 2,000 US flights cancelled and domestic airlines like Porter cancelling flights the day of the glitch, travellers faced significant delays.
With an influx of travel insurance claims expected to follow Friday’s cyber crash, ensuring holistic protection against travel-related risks for Canadian clients is becoming increasingly important.
Trip cancellation and disruption: a must-have
While travel insurance coverage can vary widely, policies that include cover for disruption-related incidents could protect clients in cases of delays or cancellations caused by tech outages.
“When helping clients make informed decisions on travel insurance, the specificity of the policy is really what’s important to consider,” said Kyle Sparkman (pictured), chief sales officer at Allianz Global Assistance Canada.
Stressing the importance of brokers clearly outlining to clients what their travel policy does and doesn’t cover, Sparkman added: “Brokers can have really informed conversations with clients about gaps in their coverage. A lot of clients don’t realize what is and isn’t covered under their policies and often just assume they have enough coverage, which is problematic.”
Friday’s events highlight that in our increasingly digitalized world, where travel logistics rely on complex computerized systems, it is crucial for brokers to emphasize travel policies that go beyond typical coverages like medical expenses and delayed baggage, especially as unforeseen tech disruptions are likely to become more common.
According to Accenture’s 2024 Pulse of Change Index, driven by advances in generative AI, technology surged from being the No. 6 cause of business disruption to the No. 1 cause within just one year.
How can brokers combat travel underinsurance?
When it comes to sourcing cover for more typical travel-related disruptions like medical issues, Sparkman revealed that many Canadians often underestimate its importance and are generally unprepared for the complexity of medical systems outside the country.
Recounting instances of clients receiving calls from US hospitals to collect payments, Sparkman underscored the financial consequences Canadians may face if not properly insured. “It can become a life-altering financial situation,” he said.
“Brokers should understand that Canadians are usually either completely over covered because they buy travel insurance all the time, or they’re completely under covered because they think that nothing’s going to go wrong,” said Sparkman.
A recent survey reveals that many Canadians fall into the latter category. CAA South Central Ontario found that 40% of its members who travel do not purchase emergency travel insurance. Additionally, the survey discovered that 23% of respondents went on their last trip outside the province without any form of travel insurance, exposing themselves to potential financial burdens.
This trend of underinsurance is especially concerning as recent reports indicate that travel desire among Canadians remains high. According to the 2024 Blue Cross Travel Study, 79% of Canadians plan to travel outside their home province or territory in the next year.
To ensure clients stay protected, Sparkman advised brokers to discourage clients from relying too heavily on travel coverage provided by their credit cards, which is often inconsistent.
“Limits can change; you used to see $5,000 per insured traveller, but many credit cards have reduced this amount to $2,500 per traveller,” he said. “To receive coverage, credit cards often require the entire cost of the trip to be charged to the card. If people are using flight credits, if something goes wrong, the coverage they get from their card might not be sufficient.”
Brokers should take a close look at the coverage clients receive through their work benefits and credit cards and come up with a specialized travel insurance plan to fill any gaps based on their specific needs.
While travel insurance might not be top of mind for consumers as much as other pertinent coverages like home and auto, Sparkman suggests that brokers can improve travel coverage uptake by including travel insurance as part of comprehensive bundles with other products. Touching base with clients about their lifestyle and upcoming plans, and offering customized solutions, is key to providing relevant travel solutions.
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