Travel Insurance as a Social Service
Travel insurance has been called many things since it was invented. It has been named a ‘necessary evil’, and has often been called ‘another gosh-forsaken bill to pay’. However, insurance has also been called the handmaiden of industry, and many people don’t actually realize how much the conveniences and technologies we enjoy today are due to that crazy concept, engendered many decades ago, to help spread risk and loss in the case of adverse events. In its own way, the concept of travel insurance has helped you sit on your computer right now, on the internet, live in a house with heating (possibly your own house), have a job you enjoy, and come home with delicious Indian takeaway to sit in front of the television and watch amazing documentaries and informative news. And the bonds between insurance and these phenomena are not tenuous … let me explain!
The point of insurance is to spread the inherent risk in activities across a wider population, as well as spreading the loss that occurs when a risk is ‘fulfilled’. The risk inherent in things like travel, home ownership and car ownership is spread across everybody insured by a particular company, and indeed everybody insured in a certain country. The loss that occurs when an insured house burns down, an insured car crashes, or an adverse event happens to a traveler are spread across the same population, in the form of higher premiums – albeit quite minimally. Private insurance obviously has the secondary point of making profits for the company, however state-sponsored insurance also exists for many things.
We take the fact of home insurance, travel insurance and other forms so much for granted, that it can be difficult to imagine what your life would be like if it didn’t exist. For example:
- If you would be liable for 30 years of mortgage payments if your house burnt down, with no chance of recovering the costs, would you be likely to buy your own home?
- If you were still liable for payments on a plan when your home was broken into and your goods stolen, would you be likely to buy expensive, state-of-the-art equipment?
- If you could be liable for tens of thousands of dollars of medical expenses, incidentals and administration costs for a medical emergency on your holiday because travel insurance didn’t exist, would you be likely to go overseas?
- If you lived in a country where hitting somebody with your car, even if you weren’t at fault, could make you liable for tens of thousands of dollars of personal liability expenses, would you still drive to work every day, or would you limit yourself to jobs that you could walk to?
In some cases the answers to these questions will be ‘Yes, I would still do that’. In the vast majority of cases, people wouldn’t!
In the case of travel insurance specifically, how has its existence helped bring about the world we know today? If we didn’t have travel insurance, globalization as we know it would be largely non-existent. To us, that means:
- Our phone service, internet service, and even our banking services would cost more, as companies would be less inclined to outsource their staff overseas. The resulting cost increase would push up our prices.
- We would have much less access to the delicious foods and drinks of other cultures!
- Our social lives would be much less varied, and our sense of parochialism much stronger, as fewer people have had personal encounters with people from other countries, languages, cultures and religions
- We may many fewer species in the world, as the funding to save habitats, and the zoo places and transport for endangered species, would be available on a much lower scale
- 200 million people in India and China would still be living in poverty, according to a report by the International Monetary Fund, if globalization hadn’t presented a need for their services and a means of paying them
Travel insurance helps us care about the other peoples and animals of the world … it helps enrich our own mental lives by providing new experiences … and it helps enrich the lives of everyone around us as we spread the lessons we learn through travel overseas. And what level would that travel be at, if everyone who left the country had the threat of hundreds of thousands of dollars of debt hanging over their head?
