An insurance loophole could leave tour operators and travel agents thousands of pounds out of pocket in the wake of the Gatwick Airport drone incident, the Scottish Passenger Agents’ Association (SPAA) has warned.
Insurance companies are refusing to pay out against claims made on agents’ Travel Disruption Insurance (TDI) and insist that December’s incident, which led to the airport being closed for two days, is not covered by policies.
There are now calls from the SPAA – the world’s oldest organisation representing travel agents – for insurance companies to review their approach to claims that are made when travel and holidays are disrupted because of drone incidents.
SPAA council member Alan Glen, director of Glen Travel, made a £10,000 claim against his TDI policy when a customer whose holiday to Barbados, along with nine family members, was postponed for two days.
But his insurers told him that his TDI – a policy which covers unforeseen events and issues such as hurricanes, volcanic eruptions and acts of terrorism – didn’t cover incidents involving drones.
Glen said: “This is just one case, but the drone incident affected thousands of travellers so it probably only scratches the surface. The overall cost to the travel industry is still unknown but runs into many millions.
“The TDI policy – a force majeure insurance – was created as a direct result of the Icelandic volcanic ash cloud which caused widespread travel disruption in 2010 and which exposed a huge void in responsibilities.
“Insurance companies always played the ‘force majeure’ card to avoid paying out and, consequently, TDI was meant to cover the operator for potential loss from clients’ travel disruption resulting from unforeseen events.
“But as always, the devil is in the detail. When I submitted the claim, I was told that it was being rejected on the grounds that government action had closed the airport in that the Civil Aviation Authority ordered the grounding of flights until the risk could be assessed.”
Initially, it had been reported that police were treating the incident as a potential act of terrorism. However, months later the investigation has failed to find those responsible or evidence to confirm that drones were even flying close to the airfield.
“It would have been ‘better’ if the drone attack had been an act of terrorism”
Glen added: “The irony is that I was told by my insurance company that it would have been ‘better’ if the drone attack had been an act of terrorism because it would have been covered. So here we are, unable to prove or disprove anything, while insurance companies simply use this get out clause.
“I’m furious about it and I think that it is an absolutely disgraceful way for insurance companies to act. They say that what is covered is contained in the policy, but when there has never been an event like this before, how could a drone incident possibly be listed?
“Tour operators and travel agents have paid for a TDI policy to cover unforeseen events, and it is simply unacceptable to be informed that it only covers certain types of unforeseen events. I’m not aware of any insurers paying out for this incident, which means that thousands of businesses like mine could face legal action.”
The SPAA is calling on its members to press the issue of TDI claim rejection with insurers and for there to be greater clarity within policies about the scope of coverage. The organisation believes that insurers need to clearly identify incidents or events for which they will not pay out against.
Reports of a drone being flown close to Gatwick Airport in December last year led to its closure for two days. In all, over 1,000 flights were cancelled, and 140,000 passengers were affected with the final bill unknown. One airline, easyJet, estimates that it alone lost out to the tune of £15 million.