Underwriting the storm: When an airline insures the one risk no one else will |
There is a single line in the Emirates announcement of 17 June that does more work than the rest of the press release combined. The new Comprehensive Travel Cover, the airline says, pays out for conflict related medical expenses regardless of government travel advice.
To anyone who has read the small print of a travel policy, that sentence should stop the eye. War is the universal exclusion. Almost every retail travel insurer on earth voids cover the moment a government advises against travel to a region, and voids it again if the loss arises from war, invasion or hostilities. The reason is not timidity. It is arithmetic. Conflict is a correlated, fat tailed peril: when it strikes, everyone in the affected zone claims at once, the losses cluster rather than cancel, and the law of large numbers that makes insurance possible simply stops applying. You cannot pool a risk that arrives for the whole pool simultaneously. So the industry does what it has always done with the uninsurable. It writes it out.
Emirates, with its underwriter Travel Guard, has chosen to write it back in. Strip away the brochure language and the airline has done something the rest of the industry will not: it covers the loss every other policy excludes, and it pays even where a government has told its citizens to stay away. For Australians the stakes are concrete. The Qantas alliance still funnels the Kangaroo route through Dubai, yet Australia to Middle East traffic was still........