New York:
The travel insurance industry is generally paying claims to travelers stranded in Europe and elsewhere by the drifting Icelandic volcanic ash, treating it mostly as a weather-related event in their policies, industry officials said. Some said the claims were expected to total millions of dollars.
While there can be some exclusions, companies have typically covered nonrefundable prepaid travel that can pay stranded passengers $150 to $250 a day for a maximum of $1,500.
Industry officials said travellers in Iceland might be covered under clauses for natural disasters if the volcanic effects washed away roads there.
"Thousands of our customers have been affected," said Daniel Durazo, director of communications for Access America Travel Insurance and Assistance, "and we expect to pay out up to seven figures in travel insurance-related claims."
Jim Grace, the president of the US Travel Insurance Association, said that the figure cited by Durazo could be "across the board or larger" for the industry. "Industrywide it is larger than 10 million," Grace said. "This will be a significant claims event for the insurance industry."
About 30 percent of American travelers buy a range of insurance policies that cover cruises, flights and the delays or cancellations that are caused by inclement weather and sometimes natural disasters like earthquakes or extraordinary storms. About $1.6 billion is paid in premiums every year in travel insurance, but figures for loss exposure are harder to come by in an industry that guards its losses.
Smaller insurers may also be strapped with millions in claims, said Grace, who also heads InsureMyTrip.com, a Web site that aggregates travel insurance offers.
"We are talking even the smallest insurers," he said. "They have a lot of people at risk. Typically, these smaller companies are working with large insurers so there is very little chance of insolvency."
Payouts to individual travelers will depend on the specific policy and its exclusions.
"What I understand is some are treating this as weather, and some as an act of God," said Henry H. Harteveldt, a travel industry analyst for Forrester Research. That could include a disruption that is beyond a normal weather event, like an earthquake, typhoon or hurricane. "It is very much up to the individual insurance underwriter and their approach," Harteveldt said.
Barry Bistreich, principal insurance examiner for the New York State Insurance Department, said it was still too early to tell the scope of the claims and how they were being settled as travelers grapple with logistics. But he expected policies to be settled unless there were specific exclusions.
"I have no knowledge of anybody who has put in a claim that has been denied," Bistreich said.
Most companies are covering policy holders' cancellations and some costs of delays, which include additional food and lodging. Carol Mueller, spokeswoman for Travel Guard, said the company was focusing on trying to get customers on flights.
"We are covering it in our core retail policies," Mueller said.
Industry officials likened the ripple effect of the disruptions as similar or larger in scope than what occurred after the September 11 terrorist attack in terms of numbers of people stranded, the duration and the geographic area affected.
Insurance companies said their call centers had been inundated with travelers wanting help. "Our phones for the last three or four days have been blitzed," said Michael Ambrose, president of Travelex Insurance Services.
Bob Chambers, operations executive president for CSA Travel Protection, said calls jumped more than 50 percent, since last Friday.
"We get some people who say, 'Is it too late to buy insurance?' " He paused a moment before answering, "It is."