Escalating Tension In Middle East Raises Cost Concerns Among Travellers, Insurers

By Karina Imran

KUALA LUMPUR, June 27 (Bernama) — Air travellers and insurance companies are deeply concerned over possible rise in costs brought on by the escalating geopolitical tension in the Middle East which has led to abrupt closure of major airports in the region, which serve as among the busiest aviation hubs.

The widespread flight delays, rerouting and cancellations are affecting global travel routes through the Gulf region - despite a ceasefire announced between Iran and Israel.

Transport Minister Anthony Loke confirmed that several Malaysian flights to the Middle East have been cancelled following the missile strike on the US military base in Qatar.

"The situation had disrupted flight paths to Europe, with airlines forced to avoid the Middle East corridor," he said recently.

Insurance claims relatively muted for now, uptick in travel insurance 

While the impact on insurance claims has remained relatively muted for now, industry players are closely monitoring the situation.

Tune Protect Re Ltd chief executive officer Janet Chin told Bernama that the insurer has not observed a spike in claims or inquiries specifically related to the Iran-US conflict.

The Iran’s missile strike on a US base in Qatar, came in retaliation for a US airstrike on Sunday, which targeted three Iranian nuclear facilities, namely Fordow, Natanz and Isfahan, marking a sharp escalation in regional hostilities.

“Typically, standard travel insurance policies in the market do not cover events such as these. These situations are generally listed as exclusions in most policies due to the unpredictable and high-risk nature of such events. 

“Coverage for these scenarios may be available under specialised or optional add-ons, depending on the insurer, but they are not included as part of a regular travel insurance plan,” she explained. 

She added that due to the nature of coverage under a standard travel plan that does not cover incidents or events related to war or warlike operations, Tune Protect do not foresee there will be any increase in claims.

 She said Tune Protect continues to monitor the situation closely and travellers are encouraged to stay informed of travel advisories and understand the scope of their travel insurance coverage before departure.

While there has been a marginal uptick in travel insurance purchases through Tune Protect’s direct-to-consumer (B2C) channels likely reflecting heightened travel awareness among independent travellers, but there is no clear evidence that it is attributed to the circumstances in the Middle East. 

Meanwhile, Etiqa Insurance noted there are spikes in enquiries related to flight delays or cancellations caused by the Iran-US base incident from customers and agents.

“Yes, there are spikes in enquiries from customers and agents, but not yet for claims,” said a spokesperson.

However, unlike Tune Protect, Etiqa has not seen a surge in demand for new travel insurance policies despite the regional instability.

Cancellation 

Nadia Ahmad Najmi, 25, made the difficult decision to cancel her planned holiday to Europe, despite having everything arranged from flights to itinerary.

“I had been looking forward to this trip for months but with the recent rise in geopolitical tensions, especially with what’s happening in several parts of the world right now, I just didn’t feel comfortable going through with it. 

“My family was also quite anxious. Honestly, their concern weighed heavily on me. So, I decided to cancel and wait until things are more stable. It’s frustrating and disappointing but at the same time, peace of mind is worth more than a holiday right now,” she said. 

Meanwhile, Mohammad Redzuan Imran, 30, who was planning to visit his family in the United Kingdom, also chose to postpone his trip.

Although the UK is not directly affected by ongoing conflicts, he noted that flights from Kuala Lumpur often pass through airspace over regions experiencing heightened tensions.

“With all the reports about airlines rerouting or avoiding certain air corridors, it just didn’t feel right to take the risk.

“I hope things will stabilise soon so I can rebook when it’s safer,” he said.

However, owner of Travel for Lifetime Zairol Hasri Md Akhir said his company has not received any cancellations for trips to Europe in September and October.

“Besides, we had already planned from the beginning of the year to purchase flight tickets (no possible cost hike in tickets or insurance). So for this month, there are no trips scheduled by our company,” he said.

-- BERNAMA