Anna went on holiday to Kenya in February 2020. Her flight home in late March 2020 was disrupted because of the outbreak of COVID-19. The Kenyan government prohibited international travel from Kenya (with few exceptions) to prevent the spread of COVID-19. This meant Anna was not able to fly home as planned. She decided to book on a flight departing Kenya before the ban on departures came into effect, rather than staying in Kenya until the ban was lifted.
When Anna arrived back in New Zealand, she claimed the cost of this flight on her travel insurance, but her claim was declined. Anna did not agree with the insurer’s decision so referred the matter to FSCL.
Anna also complained to us about the length of time it had taken the insurer to review their decision to decline her claim.
When Anna asked the insurer to review their decision, they did not acknowledge receipt of her request. When Anna followed up around a week later, the insurer said her claim had been passed on to be reviewed, but they did not indicate a likely timeframe.
Around two weeks later, Anna sent the insurer a follow up email, but they did not respond to her. In the following two weeks, Anna phoned the insurer twice to follow up on their review of her claim. Both times she was given timeframes for a response, which the insurer failed to meet. Anna eventually received the insurer’s response, confirming the declinature of her claim, 26 working days after she had requested the review.
The insurer considered Anna’s claim was excluded from cover because her travel plans were disrupted by government border closures. The policy stated that the insurer would not pay for claims where a government had prevented or limited the insured’s travel plans.
The insurer had apologised to Anna for the delays with their review, but they had not offered her any compensation.
Anna believed the insurer should pay her claim because it arose from an unforeseen circumstance, which was beyond her control. When she went on holiday, she could not have predicted that the outbreak of COVID-19 would escalate so severely.
While we empathised with Anna’s situation, we agreed with the insurer that her claim was excluded from cover because her travel plans were affected when the Kenyan government banned international departures.
However, we found that the insurer should have better communicated with Anna about the delays with their review process. We considered the extraordinary circumstances the insurer had faced due to COVID-19. They had received an influx of travel insurance claims due to the disruption COVID-19 had on travel. They also had to transition their staff to working from home due to lockdown restrictions in New Zealand, which also impacted their response times and ability to give customers updates in a timely manner. Despite this, we considered that a payment of compensation for inconvenience was warranted, in addition to the apology the insurer had already given Anna.
We suggested that the insurer should pay $250 compensation to Anna to recognise her inconvenience. Both parties accepted our view and the complaint was resolved.
Insights for participants
It is understandable that an insurer may not be able to review claim decisions within their usual timeframes when there is an extraordinary event such as an epidemic or pandemic. However, where possible, the insurer should comply with the standards of service set out in the Fair Insurance Code for when a catastrophe occurs, including keeping customers updated at least once every 20 working days (or at another agreed interval).