Travel insurance : lessons emergent from recent volcanic ash clouds

Abstract

This, principally quantitative, dissertation appertains to the eruption of the Eyjafjallajӧkull volcano in Iceland in 2010 and the volcanic ash cloud that followed. The grounding of flights brought about chaos in European air traffic and millions of passengers were stranded around the globe. The purpose of this study was to determine the impact and the losses that this incident left on the airline industry and, particularly, on the insurance companies and the travellers holding a travel insurance policy. Such a topic is concerned with recent events and, thus, minimal data could be found in this regard, especially within the local context. Therefore, this study was taken up to also shed more light on the impact and the response of local insurance companies to the volcanic ash cloud incident. Through the sourcing of already-existing data and the primary data gathered by means of the distribution of questionnaires, it was established that the insurance companies were not prepared for such an incident and, furthermore, there were mixed opinions and arguments as to how this situation had to be dealt with. Following this event, the insurance companies did respond, however, by offering cover for any futuristic unanticipated volcanic ash disruptions. Despite that such a chaotic incident was unheard of before and also could never have been anticipated, the press still managed to foment widespread criticism of the insurance industry. Therefore, the main aim of this dissertation was to investigate, if any, the lessons that could be learnt by the travel insurers from such an unanticipated but highly chaotic episode.