With the removal of all pandemic-related outbound travel measures in Hong Kong, many travel enthusiasts have already arranged for trips this year and taken out travel insurance before departure so they can be protected in case of mishaps during the trip. Earlier this year, the Consumer Council made enquiries with 26 insurance companies offering travel insurance plans and gathered product information on their most basic single trip travel insurance plans (excluding travel insurance plans specifically for short trips to the Mainland or Macau, and cruise holidays).
The survey found that even with the same destination and travel duration, premiums for different plans could vary by twofold for an individual, and almost 6 times for a family of 4. However, the Council reminds consumers that the premium is not the sole deciding factor when choosing a travel insurance policy, as the coverage and maximum benefit limit could vary significantly across different plans. Take “Medical Expenses” as an example, maximum limits of the 26 surveyed basic travel insurance plans ranged from the lowest of $100,000 to the highest of $1,200,000. Therefore, consumers are advised to understand whether a plan is suitable for their personal needs and itinerary, and to carefully review the terms and scope of coverage before taking out a policy. Besides, although elderly consumers pay the same premium as adults, nearly 70% of the plans lowered the maximum benefit limits on medical expenses and personal accidents for the elderly, commonly down to 50% of the original benefit, which impairs protection for elderly travellers. The Council understands that this may be due to risk management considerations, but with an ageing population, travel expenditure of the seniors could be material and it is worthwhile for the industry to enhance travel protection for senior citizens.
Wide Variation in Premiums for Individuals and Families
Maximum Benefit Limits Halved for Older People in Some Policies
Many consumers purchase travel insurance in haste or with an eye only on the premium. Among the 26 travel insurance plans, the premium for a 7-day short trip to relatively popular destinations in Asia (e.g. Japan, Korea, Thailand, Malaysia, etc.) ranged from $79 to $263 for an individual, a difference of more than double. Some policies offered a “Family Plan” option, i.e. children travelling with their parents can be insured for free or at a lower premium. Taking for example a family of 4 (including parents and 2 accompanying minor children) on the same itinerary, premiums ranged from a minimum of $157 to a maximum of $1,052 across different plans, a variance of almost 6 times. However, even with comparable premiums, the coverage items, terms and scope varied considerably, especially for elderly consumers who are subject to different enrolment age limits and benefit amount. As such, consumers are recommended to compare details of different policies, while the premium should not be the only consideration.
Compared with a similar survey on travel insurance for the elderly conducted by the Council in 2016, most insurance companies have raised the maximum enrolment age for single trip travel insurance plans from 70 to 75 years old to 80 to 85 years old currently. However, only 9 plans in this survey, i.e. less than 35%, did not have a maximum enrolment age. In addition, the situation of reduced travel coverage for the elderly is yet to be improved. 1 of the policies with the most stringent definition of “seniors” lowered the maximum benefit limit on “Personal Accidents” for insured persons aged over 65 to only 50% of the original benefit. 8 other plans reduced the maximum benefit limit under this category to 50% of the original benefit for insured persons aged over 70 and over 75 respectively. Although 1 plan did not reduce the maximum benefit limit for the elderly, insured persons aged 70 were required to pay an extra 40% in premium.
Furthermore, out of the 26 surveyed plans, 6 were also reviewed by the Council in the 2016 survey, among which 1 plan had since removed the arrangement that the elderly may receive 50% of the original coverage under the “Personal Accident” category; while another plan had relaxed the age limit for the insured, which is worthy of emulation by other industry players. Silver Tourism offers huge business opportunities, and if travel insurance premiums and coverage are comparable to those for other adults, it would help boost the confidence of this consumer group as well as protection of their rights for outbound travel.
Significant Disparity in Maximum Benefit Limit on Medical Expenses
“Medical Expenses” is one of the key scopes of coverage for travel insurance, which indemnifies medical expenses arising from accidental injury or illness during the trip, as well as the cost of follow-up medical treatment upon return to Hong Kong within a specified time period. All plans provided “Medical Expenses” coverage, but the maximum coverage varied significantly from $100,000 to $1,200,000, with about half of the plans providing a maximum of $500,000 for “Medical Expenses” coverage. Additionally, 22 plans offered Overseas Hospital Cash Allowances, with maximum benefit limit ranging from $1,000 to $10,000. Consumers should note that apart from comparing the maximum benefit limits, they should also pay attention to the “daily” benefit ceiling among different plans: assuming 2 plans had the same maximum benefit limit for overseas hospitalisation allowance, the higher the “daily” payout ceiling, the fewer the days that will be covered, and vice versa. About half (12) of the plans in this survey provided coverage for up to 10 days, while among the remaining plans, 6 plans provided a maximum coverage of 4 to 6 days, another 4 plans offered up to 15 to 50 days respectively.
Definition of Emergency Aid Coverage Items May Vary
Unlike “Medical Expenses” which are paid out on a “reimbursement” basis after an incident, “Emergency Aid” generally requires assistance services to be arranged and provided by emergency support teams or service providers authorised by the insurer, most of which are paid directly by the insurer to the support providers. “Emergency Aid” under 25 plans basically covered “Emergency Medical Evacuation”, “Repatriation of Mortal Remains”, “Compassionate Visit” and “Return of Unattended Dependent Children”. As different insurance companies may have varied definitions of coverage items, consumers should not compare simply by the name of the item, otherwise they may miss out on some details. For example, different insurance companies have different definitions of whether the insured person’s unattended minor children can be escorted back to Hong Kong when the insured person is seriously injured or ill overseas. In addition, some insurance companies’ emergency support services include travel information on foreign currency exchange and flights, or even business concierge arrangements, which may be at odds with consumers’ general understanding of “Emergency Assistance”. As a more satisfactory arrangement, the Council recommends that insurance companies could consider setting up a separate dedicated hotline for concierge services that are relatively less urgent, so that consumers can distinguish between the contact numbers for real “emergency assistance” and concierge services.
Carefully Study the Restrictions and Scope of Coverage for Self-drive Tours and High-Risk Activities
In recent years, many people favour self-drive tours, and over half (15) of the plans in the survey provided Rental Vehicle Excess Protection Benefit. In the event that the insured person’s rental vehicle is damaged in an accident or stolen during a self-drive tour, the insurance company would pay for the claims excess in the motor insurance, which would otherwise be borne by the insured. Maximum benefit limit ranged from $2,000 to $10,000. However, consumers should note that personal travel insurance does not cover liability for third-party casualties arising from traffic accidents. Therefore, consumers should read rental agreements carefully before booking a car, and check whether the terms and conditions include “third-party liability” insurance, or check with the car rental company for details. Consumers should also take into account the travel destination and personal driving experience, so as to consider whether additional insurance is needed to provide sufficient protection for the driver and their companions.
Whether or not higher risk activities (e.g. skiing, hot air balloon rides, scuba diving, etc.) are covered by travel insurance is something that consumers tend to overlook. Apart from whether higher risk activities intended to engage in are covered, consumers should also be aware of related restrictions: for instance, 1 of the policies stated that some higher risk activities would not be covered for persons aged over 70, while another policy lowered the maximum benefit limit for injury or accidental death of the insured person participating in higher risk activities. Moreover, most of the plans that covered diving/scuba diving had a depth limit of 30m to 45m. For mountain ascent or descent activities that do not require the use of specific equipment, 10 out of 21 plans set altitude limits ranging from 3,000m to 5,000m above sea level. Consumers are advised to check with their insurers or insurance intermediaries on whether specific higher-risk activities or sports are covered before taking out a policy to avoid claims being rejected in the event of an accident.
Consumers may consider the following tips when choosing a travel insurance policy:
- Even among “basic” plans, premiums, coverage items, benefits, and compensation terms among different travel insurance policies could vary considerably. Consumers are advised to extensively compare and carefully review the terms and conditions among policies, paying attention to the definition and scope of coverage, then choose an appropriate plan based on factors such as personal needs, destination, and risks of travel activities;
- Consumers who intend to engage in higher-risk activities during a trip should check whether those activities are within the coverage scope of the travel insurance plan, and pay attention to relevant restrictions;
- Check for any special restrictions on travel insurance coverage for seniors or minors, e.g. whether the maximum benefit limits on medical expenses and personal accidents are reduced. If necessary, consider taking out a plan with a higher benefit limit to ensure more sufficient coverage.
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