"Get Vaccinated and Take Off" Growing Expectations for Overseas Travel... Start with Travel Insurance [Become an Insurance Insider]

Will Increased Vaccinations Unlock Overseas Travel?

[Editor's Note] Difficult insurance, a clear explanation of insurance that remains confusing even after listening to explanations. There is no bad insurance in the world, only insurance that doesn't fit me. If you follow easy-to-understand insurance explanations, the path to becoming an 'insurance insider' is not far away.

[Image source=AP Yonhap News]

[Asia Economy Reporter Oh Hyung-gil] As the domestic vaccination rate increases, there is a forecast that more people will travel abroad as early as the second half of the year. Major airlines have already started selling tickets, raising expectations.

However, in case of an emergency during overseas stay, one may face situations requiring treatment locally or emergency evacuation back to Korea. Financial authorities and the insurance industry plan to improve travel insurance tailored to the characteristics of overseas travel after COVID-19.

The Financial Supervisory Service intends to effectively improve coverage for medical expenses and evacuation costs through the development of overseas travel insurance products and revision of terms and conditions.

The minimum hospitalization period requirement for overseas travel insurance, which previously required at least 14 days of hospitalization to receive insurance benefits, will be lowered to 7 to 0 days. The coverage limit for evacuation costs will also be raised to provide practical insurance benefits.

The current travel insurance terms, which pay evacuation costs (transportation and repatriation fees) only if hospitalized for more than 14 days at a local hospital, will be lowered. Discussions with the insurance industry will begin in the second half of the year to set an appropriate hospitalization period (under review between 7 and 0 days) for insurance payment.

A financial authority official said, "We want to reduce the hospitalization period so that evacuation costs can be covered by insurance even with shorter hospital stays overseas, but if it is reduced too much, there is a moral hazard issue, so we plan to discuss an appropriate period with the industry."

The coverage limits for medical expenses and evacuation costs will also be increased to provide substantial benefits.

In case of a major accident overseas requiring repatriation to Korea by a dedicated aircraft, evacuation costs can reach 200 million to 300 million KRW. Even using a regular passenger plane requires installing a patient bed and medical equipment, costing about 50 million KRW. However, the evacuation cost coverage limit under overseas travel insurance is only about 10 million to 30 million KRW. The difference is borne by the individual.

Additionally, public awareness campaigns will be strengthened to encourage travelers to purchase travel insurance. As of 2019, the domestic travel insurance subscription rate was 11.9%, low compared to 75% in the UK and 34% in the US.

The US and Canadian Departments of State and Foreign Affairs recommend on their websites that travelers purchase insurance covering repatriation costs of over $50,000 (about 60 million KRW) when traveling abroad. The UK government website also advises checking whether insurance covers medical expenses for illness or injury and repatriation costs, providing examples of expenses incurred in case of illness or accidents.