Merlyn Holkar, Research Officer, Money and Mental Health

Travel insurance and mental health: a turbulent journey

Last week, we submitted evidence to the financial regulator (the FCA) about access to travel insurance. Research by Macmillan has previously shown that people with cancer get a bad deal when trying to get travel insurance, and the FCA called for evidence to find out if people with other health conditions have a similar experience.

This isn’t an area that we’ve looked at in depth before, so we sent a survey out to our Research Community, a group of over 3,000 people with experience of mental health problems who are always at the heart of all our work. The results were really concerning. The majority of people who responded felt that travel insurance they’d bought was expensive, and many told us that they’d travelled without insurance, or even cancelled their trip, as a result.

  • Two thirds (68%) of those who’d bought insurance felt that it was somewhat or very expensive
  • 15% had chosen not to travel, because their insurance quote was too expensive
  • One in five (21%) had travelled without insurance, because it was too expensive

Beyond the numbers, we asked people to describe what it’s like trying to get travel insurance, for someone with experience of mental health problems. As usual, we had some really powerful responses. But there was one in particular that perfectly captured what a lot of others were saying:

“The fact that a high proportion of the population have some form of mental health needs but are basically barred from getting decent travel insurance is scandalous. Surely going away on holiday is a step towards improving one’s well-being? How can that happen though if people try to be responsible by purchasing travel insurance only to find they get penalized for having a mental health problem? It’s not fair and it needs to stop.”

A question of fairness

Whilst lots of people recognised that it might be fair for them to pay more for travel insurance because of their mental health problems, there was a strong sense that insurers are often unfair in the way that they price this risk. Many felt that insurers don’t properly understand mental health. I’ll pick out three issues that were raised, that our respondents were particularly unhappy about:

  • Having to pay more for travel insurance because of historic mental health problems, even if this was many years ago and they’ve since recovered from the problem.

“It’s unfair that I can be classed as so much more risk for having previously been diagnosed with a mental health condition. It no longer affects me… and have been stable for years.”

  • Being charged more because they take psychiatric medications (eg antidepressants), even though these are supposed to help people manage their mental health problems, and reduce risks.

“As I was on medication for my illness they would not cover me. I tried to explain that NOT being on medication would make me a higher risk for them to cover, but they would not listen…”

  • Sweeping exclusions, meaning that the insurer won’t pay out for any claims relating to mental health. We’re concerned that these exclusions might leave some people unclear about the extent of their cover, and that for others they might drastically reduce the value of taking out insurance.

“The price is impossible for someone on a low income and the exclusions render it useless. If I had a fall from a rock or a bank and broke something they would say I jumped and not pay!”

So what can be done?

Our main recommendation is that the FCA carries out a market review, looking at how the price of travel insurance is affected by different health conditions. As the financial regulator, the FCA has unique power to look across the whole market and ensure that insurers are treating people fairly. We want insurers to justify the higher prices they charge people with mental health problems, and demonstrate that they are based on solid evidence of risks and costs, because otherwise this practice is nothing more than discrimination.

We’ve also asked the FCA to work with insurers, and people with mental health problems, to make travel insurance easier to understand. Travel insurance is a complex product, and we’re concerned that pricing models and exclusion terms are often difficult to understand, particularly for people with mental health problems, which can commonly affect people’s decision making ability and attention span. By building consumer understanding, the FCA can help people with mental health problems to make more confident, informed decisions about travel insurance.

And finally, if somebody with a mental health problem is refused cover, or offered and astronomical price for it, we think the FCA should step in and point them in the direction of specialist insurance providers. These insurers can sometimes offer a better deal for people with pre-existing medical conditions, but they’re not very well known, and often don’t feature on price comparison websites.

One in four of us will experience a mental health problem each year, and by some estimates this rises to almost half of us across a lifetime. So if the travel insurance market isn’t working for all these people, then it really isn’t working at all.