Seismic activity in the Mediterranean region usually sparks debates and statuses on local social media related to whether people “felt” the tremor or not. It is restricted largely to this and rarely does it have people running for physical cover. There is, however a specific type of cover that is very much on people’s minds - Travel Insurance. This issue is of particular concern for those traveling to Sicily for a short holiday in the next few days. With daily reports of Mount Etna having one of its seismic strops, spewing out magma flows and plumes of volcanic ash, it is the air-borne dust cloud which can affect the aviation industry and in turn, throw a spanner, or a rock, in this case, in the works of people’s Sicilian getaway breaks.

WhosWho.mt spoke to insurance experts Adrian J. Galea and Mark Laferla about this very situation to clarify how people may be affected and what to expect.

To begin with, it is important to clarify that a natural disaster, particularly a seismic one, can never be fully predicted and therefore, until it happens, insurance providers cannot anticipate issues related to flight disruptions and act upon them, refusing coverage. In other words, until a disaster actually happens and is reported on the local and international media, making it a “known event”, if travel insurance (hereafter referred to as TI) was booked prior to a natural disaster becoming a “known event”, the insurer is bound to honour claims. Adrian J. Galea, Director General of the Insurance Association Malta seeks to clarify that “it all depends on the type of cover bought. Some policies may include coverage for that peril, while others do not; and those which do might subject it to a time proviso, for example informing the customer that cover would be available as long as it is taken out before the peril is publicly announced or forecasted.” He further explains that “insurance cover is there for the unexpected event and not for an expected one. Insurers cover risks which occur after the policy comes into effect. Risk is intrinsically based on the ‘unknown’.”

Adrian J. Galea/ Insurance Association Malta website

So far, so clear.

However, we delved a little deeper. If TI was booked over the phone or online, as a natural disaster was unfolding (at the same time) and news reports had not yet reached the public, or become fully available – as a “developing story” – what then? Mark Laferla Jr, Joint Managing Director at Laferla Insurance acknowledges that they “do see an uptick in policies being bought when there is a developing story happening.” He frankly said, “Our experience to be very honest, is that there is an uptick – not necessarily fraudulently, but it does happen especially for transit airports for long haul.”

Mr Galea explained that “News travels fast nowadays and gone are the days when you hear or learn about a particular event the next day through the newspapers.” So, it would be very difficult to buy a policy once a known event is out in the public domain. “The trigger,” he states, “is the public announcement or forecast, and if therefore insurance cover against a particular peril was taken out before a particular event became public knowledge, then coverage applies unless obviously the policy states otherwise and specifically prohibits, through an exclusion clause, or imposes a limitation on such coverage.” Mr Laferla gives clients the benefit of the doubt and says that while the choice to buy insurance “could be genuine”, he also agrees that “it could be because the news alerts clients.” The question remains – are clients passing the buck to insurers? Mr Laferla adds that “ultimately [their] business boils down to trust”, and both attempts to buy insurance and make claims are dealt with on a case-by-case basis.

Hypothetically, if TI is booked for a destination where a natural disaster is currently happening, but the planned trip is further than a week or two into the future – would that allow TI to cover claims on flight delays? To clarify, if Etna is erupting and spewing ash now, in August, but somebody wants to book flights for late September or even late October –thinking of parents with children’s mid-term holidays – would TI cover you then? Mr Laferla recommends taking out a policy saying that “as with most eruptions on our doorstep, these are often sporadic and there are alternative airports/ferry ports etc – normally I don’t find them to be totally disruptive, so people should still go ahead and take out a travel policy – it fits in with insurable interest – it makes sense to insure as soon as flights are booked.”

What allows an insurer to gauge the length of time that the “known event” will keep occurring and disrupting flights? Mr Laferla frankly says that “Any insurer is lying if they tell you they know exactly what is happening – weather is more predictable than seismic events.” Mr Galea explains that “Insurers tap into the relative authorities’ announcements or guidance or main news portals.” And while expert advice may be occasionally called upon, as Mr Galea explains that “Specialist knowledge may be tapped into as well,” Mr Laferla says that it is “impossible to be that specific”, while Mr Galea adds that “one source of knowledge which insurers also refer to is that provided by their reinsurers.”

Mr Laferla explains that the information and calculations which their risk-analysts take into consideration are done “at a macro level” where “they do study in detail what the odds are that a major volcanic eruption or hurricane will happen” as they have access to major data points; and this is “what allows us to price our products. We can predict how much money we need to pool in our premium from the many to pay for the claims of the few.” It is a matter to statistical prediction of how many clients they must pay.

Mark Laferla Jr/ LinkedIn image

What advice would you give those who are planning to book flights to Sicily in the immediate future?

Mr Galea is quite clear when he states that “Customers should do their homework, their research, understand the alternatives, carry out a risk/benefit analysis, rather than buy insurance (at times blindly). It is important the client understands what cover is available to him, what risks are covered and what risks are not covered at the time a quote is provided. Any proposal form that needs to be compiled should be given the time, care and attention and compiled in a truthful and comprehensive manner.” Honesty is, in this case more than ever, the best policy, since “This is the time where an insurer gets to know the risk for which a client wishes to buy insurance and providing incorrect and false information may actually do more harm than good as it would have misguided and basically issued insurance cover on the basis of incorrect information.”

Iterating Mr Laferla’s recommendation of immediate and timely policy-buying rather than dallying, Mr Galea goes on to say that “once a trip is booked, travel insurance should be taken out immediately, as nobody can predict if or when natural disasters can occur in the meantime if you delay taking out insurance cover.” He adds that “The worst risks are not the typical damaged or delayed luggage or flight delay, but the “black swans” such as the traveler being the victim of an accident and/or requiring an air ambulance to be repatriated. These claims could run into several thousands of Euro, and the European Health Insurance Cards do not cover any repatriation costs.”

Book ahead and take out your policy the minute you have a flight confirmation, speak to your insurance provider candidly and explain your position clearly.