It’s a rip-off: save hundreds on travel insurance
Source: finder.com.au
Next time you book a flight online and find yourself hovering over the travel insurance section and wondering ‘should I?’, here is your answer: almost certainly not.
Price comparison website finder.com.au has compared the costs of travel insurance bought direct versus through airlines and travel agents, and the results are startling.
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If you opt to go through the airline, you could easily find yourself paying double or even triple what you’d pay direct. If you are insuring a family of four or five, taking the easy option could cost you hundreds of dollars.
What the research finds
Finder.com.au went through three groups: a single 21-year-old student; a 35-year-old couple with two children aged seven and five; and an older couple aged 55 and 60. It tested these three groups out on three destinations: Europe, Thailand and the USA.
In all cases the average across various types of cover showed airline-sold insurance to be more expensive than direct. Insurance sold through travel agents, meanwhile, was even more expensive than that sold through airlines.
Admittedly the airline quote was marginally cheaper in three of the 36 categories: for the 21-year-old’s basic cover in the USA, the family’s medium cover in the USA, and the older couple’s medium cover in the USA. But in the remaining 33, direct was cheaper.
The biggest differences were in the young family category. As seen in the table below, taking the time to choose your travel insurance direct can easily save you a couple of hundred dollars.
Source: finder.com.au
Are these figures reliable?
It is worth remembering, however, that finder.com.au has a vested interest. As a price comparison website, it profits from the move away from financial services and insurance middlemen, and towards a more savvy and active consumer. More traffic on its website will encourage more insurers to pay to list their products there.
With this in mind, we did our own research into the premiums charged by airlines. The results showed that, while in general finder.com.au’s findings were right, things weren’t quite as simple as they seemed.
The key issue is that the initial quote that appears on finder.com.au’s website is unlikely to be the same as the premium you will end up paying. It could be less; but it could also be a lot more.
For a single 31-year-old travelling to Indonesia for a week, Jetstar quotes a premium of $77.95. Quotes obtained through finder.com.au suggest you can easily get equal cover for around $40 through direct insurers.
Jetstar may provide cheap airfares, but its insurance doesn’t always cut the same caper.
According to finder.com.au’s quotes, even Jetstar’s own insurer, AIG, charges less direct – $71.20 – and offers far better cover for that price.
However, when we actually clicked on the AIG quote on finder.com.au, the quote increased to $96 – almost $20 more expensive than the airline’s quote.
The same thing happened for a family of four going to Indonesia for a week. Jetstar quotes $311.80 for this trip, while AIG, via finder.com.au, quotes less than half as much: $142.
But when we clicked on the quote and typed in the same details, the quote jumped to $192 – still much lower than Jetstar’s quote, but $50 up on the original quote provided by finder.com.au.
The reverse was true when we compared Virgin Australia’s quotes with finder.com.au’s. Virgin Australia quoted a premium of $78 for a single 31-year-old. Via finder.com.au, Virgin Money – which uses insurer Allianz, the same insurer used by Virgin Australia – quoted $20 less ($58) for slightly inferior cover. For much better cover, you could pay $64.54 direct.
When we clicked the link to for the comprehensive quote, Virgin Money reduced the premium by one dollar.
Overall, the message was still clear: the chances are you can get a much better deal than the one offered by your airline.
Michelle Hutchison at finder.com.au says: “If your airline is offering you travel insurance, don’t just say no; shop around and compare.”
What the airlines said
So is there any excuse for these stark mark-ups? We contacted Virgin Australia and Jetstar and asked them whether there was any major cost in providing insurance quotes, or whether they were in fact just exploiting consumers’ armchair mentality.
Virgin Australia did not engage the details of the query, simply saying: “Virgin Australia offers great value airfares and a variety of complementary products and services, including our award-winning travel insurance.”
Jetstar made more of an effort to address the concerns raised, but provided no satisfactory explanation for some of the huge discrepancies between its own quotes and those provided directly by the same insurer.
“While the price of cover will vary depending on a range of factors, we always aim to offer products that our customers want at an affordable price,” a spokesperson for Jetstar said.