By Ombudsman for Financial Services
In 2020, Ombudsman for Financial Services (OFS) received a total of 775 new cases under the conventional insurance and takaful sector. There was a slight increase in the number of disputes registered due to the rise in the travel insurance disputes. About 15% of the new disputes were travel insurance claims with issues related to trip cancellation and curtailment due to border closures amid the COVID-19 pandemic.
Travel insurance is a policy that covers unforeseen issues incurred before or while travelling. The travel policy usually covers the following:
- delayed, loss of luggage or personal belongings
- medical expenses
- emergency trip cancellation or curtailment
The on-going COVID-19 pandemic have halted travels since last year and as a result, travel plans were either curtailed, postponed, or cancelled.
Our analysis showed that most travel insurance policies in Malaysia do not provide coverage for the pandemic peril. Policies that include pandemics, however, are not comprehensive and subject to strict limits, terms, and conditions of coverage. Thus, the claims made by policyholders can be rejected on various grounds. This involves the underwriting decision of the insurance provider and thus falls under their commercial decision.
The general trend that we observed when handling the matter is that consumers still lack understanding of the policy coverage limits, exclusions, terms, and conditions. Many people have the notion that travel insurance will cover all circumstances.
Policyholders are advised to read and understand the terms and conditions before purchasing a travel certificate or to consult the insurance provider/takaful operator or their intermediary should there be a need for clarification.
How can you make a travel insurance claim?
If you have experienced any travel incidents and wish to seek reimbursement, you must file a claim with your insurance company. You need to provide evidence and relevant documents related to the incident such as a police report, medical report, payment receipts, travel dockets etc.
Not all claims submitted are eligible to be reimbursed by the insurance provider. An insurance policy is a contract between you and the insurance company, and the protection provided is subject to terms and conditions stated therein.
If you feel that your claim is unreasonably rejected by your insurance provider, you are entitled to appeal. If you are still dissatisfied with the final decision of the insurance provider, you may approach the OMBUDSMAN FOR FINANCIAL SERVICES (OFS).
How OFS resolves your travel insurance dispute?
Once you have received the final decision letter from your insurance provider, you may lodge a dispute with OFS. If your dispute is within OFS’ jurisdiction, we will proceed to register your complaint. We will gather all the pertinent information and documents related to your case and begin our investigation.
We look at each case independently and impartially and we do not take sides. OFS weighs all the facts and evidence provided by the eligible complainant and the insurance provider. We also consider what is fair and reasonable in resolving the dispute.
Mr Chris had to cancel his trip to Japan due to COVID-19 pandemic.
Mr Chris was planning a trip to Japan from 1 March 2020 until 8 March 2020. He purchased his travel insurance on 12 January 2020. On 27 February 2020, the Malaysian government issued a Travel Advisory to all its citizens to avoid any unnecessary travel to Japan because of the surge in COVID-19 cases there.
Few days later, on 1 March 2020, the World Health Organisation (WHO) has declared that the coronavirus has seriously affected several countries including the Republic of Korea and Japan. To avoid the risk of contracting the coronavirus, Mr Chris has cancelled his trip to Japan on 2 March 2020. He then submitted his claim to his insurance company to cover the cost of his travel cancellation.
However, the insurance company has repudiated Mr Chris’ claim on the basis that the cancellation was done before the WHO declared COVID-19 as a ‘pandemic’. Mr Chris was informed of the availability of OFS as an alternative dispute resolution channel if he is dissatisfied with the final decision and wish to seek redress. Mr Chris was not happy with the final decision and filed a dispute with OFS against the insurance company.
OFS proceeded to register Mr Chris’ dispute after verifying the eligibility and the submission of the complete information and the supporting documents.
After a thorough investigation, OFS highlighted to the insurance company that Mr Chris cancelled his trip following the advisory issued by the Malaysian government in addition to WHO’s announcement on the rapid development of the coronavirus outbreak in Japan. The advisory issued by the Malaysian government is fully sufficient for Mr Chris’ claim to be accepted.
The insurance provider acknowledged the findings of OFS and agreed to revise their decision. Mr Chris is satisfied with the latest outcome and has accepted their offer.