As the flag carrier for Australia, and its largest airline, the release of Qantas’s financial results has always been a focal point for the mainstream media, but less so for insurance brokers. This time around, however, feels different – with some striking comments that act as a warning sign for the industry at large.
Chief executive officer Alan Joyce revealed an AU$1.96 billion loss for the firm and has predicted more pain to come – suggesting that international travel won’t resume until midway through 2021 with flare-ups prompted by the coronavirus pandemic keeping borders closed. To make matters worse, he hinted that routes to the US are likely to be closed for even longer and that a wide opening of overseas travel is only likely when a vaccine has been properly developed, tested and distributed.
Next year “is going to be another bad year,” he told media on a briefing call after reporting the company’s first loss since 2014. “Recovery will take time and it will be choppy.”
Joyce’s words reflect similar expectations for prolonged COVID-19 resurgences around the world – including in New Zealand, Hong Kong and Europe. Controlled flight corridors are slamming shut almost as quickly as they’re reopening.
The message for insurance brokers then is clear – the sale of travel insurance policies, which has already slumped dramatically, is not about to rebound any time soon.
Brokers don’t have to take Joyce’s word for it, either. There are plenty of other industry commentators saying much the same. In a recent report, Global Data revised Australia’s travel insurance forecast suggesting a compound annual growth rate of a mere 0.2% from 2019-2024.
It’s not just brokers that will be impacted, of course – insurers are already dealing with a tidal wave of claims surrounding planned flights and trips, despite exclusions existing in many policies.
According to stats released at the turn of the month, the Australia travel insurance industry is expected to contract by 7.7% this year. Insurance analyst at Global Data Deblina Mitra believes there are tough times ahead.
“The recovery of travel insurance is likely to be challenging and will depend on the success of containing the pandemic in Australia and the rest of the world,” she said. “Even after the possible economic recovery expected from 2021, the growth of travel insurance is likely to be subdued.”
