‘Defend refund claims by insurers’ Ian Taylor


Insurers who paid out for large group-travel cancellations early in the Covid crisis are seeking money back from travel firms in what lawyers call subrogated claims. Law firm Travlaw reports travel


organisers of school and group trips are receiving a growing number of claims where an insurance company paid a claim then “stepped into the shoes of the customer” to pursue a refund from the travel company. Travlaw associate Nick Parkinson


said: “I call them boomerang claims. We see a tranche of clients whose


customers went to their insurer in March and April and now have the insurer contacting them.” He advised companies handle


the claims “the same as when a customer asks for a refund”, insisting: “It may be no refund is due. Maybe the customer cancelled nine months out and it would be ‘disinclination to travel’ [by the customer]. Say it’s a cancellation four weeks before departure, there was still a ‘flicker of hope’ [the trip might go ahead].” Parkinson noted “there is


no binding case law” on when a consumer’s right to cancel and receive a full refund kicks in and “no


‘Insurance cover is valid if advice changes mid-trip’


Ian Taylor


Holidaymakers can go abroad confident their travel insurance will continue to provide cover if Foreign Office advice changes while on holiday so long as they followed the advice at the time of departure, the Association of British Insurers (ABI) has confirmed. However, “travel against Foreign


Office advice would invalidate travel insurance”, ABI insurance policy director general James Dalton told Travel Weekly, saying: “It has always been the case. That remains the position.” Dalton said: “We’ve tried to be


6 8 OCTOBER 2020


upfront with customers about that. “If you’re overseas when Foreign


Office advice changes, you continue to be covered. Travelling against advice invalidates insurance, but it’s not invalidated if advice changes after departing.” The ABI view may strengthen the


legal claims of consumers seeking full refunds for holiday cancellations to destinations where flights continue to operate but the Foreign Office (FCDO) advises against all but essential travel. On the Beach and Loveholidays


quit Abta last month over its insistence members refund customers in line with FCDO


We see clients


whose customers went to their insurer in the spring and now have the insurer contacting them


guidance from the government or the EU”. He said: “The insurer is racking


up claims and may think they are worth pursuing. We see a pattern with school trips and the numbers adding up, and you have law firms steering the insurance companies.”


Parkinson told Travel Weekly: “Two


or three insurers are hotter on this than others. We’re not seeing isolated claims for £2,000, but claims for large groups and school trips. The insurers step into the shoes of the consumer where the insurer has paid out.” But he insisted: “If you could


defend the claim against the customer, you can defend the claim against the insurer. The same arguments apply.” Parkinson warned the law firms


handling the insurers’ claims may also seek legal costs. He said: “You should not have to pay legal costs. There are good arguments to say they are not entitled to costs.”


‘If you’re overseas when Foreign Office advice changes, you continue to be covered,’ says the ABI’s James Dalton


advice. The OTAs say there is no legal requirement under the Package Travel Regulations to cancel and refund where a holiday could still go ahead. An initial estimate of the cost of


Covid insurance claims in the UK alone totalled £1.8 billion. Dalton, who will address Abta’s


Travel Convention on October 14, insisted: “The core nature of travel insurance is unlikely to change. “We are likely to see developments


around the treatment of Covid. Some [insurers] will cover it and some won’t.” He said: “Customers need to


be clear about what they want and


purchase accordingly. It’s important for consumers not to base their purchases on price.” Dalton confirmed insurers are


“looking to the government to take forward the recommendations” of the Airline Insolvency Review, saying: “We’re broadly supportive. These combine an airline levy with a bond-based insurance scheme.” He noted: “It’s questionable


whether it should be taxpayers who pick up the cost of repatriating people. In the review’s opinion, the travelling public should pick up the


cost combined with a bond.” i Business, back page


travelweekly.co.uk


PICTURE: Shutterstock


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