Man whose international flight was canceled due to the COVID pandemic and his airline’s insolvency lost a dispute with his insurer and was asked to try again in 2023 if a credit voucher offered by the carrier expires .
The man purchased a Mitsui Sumitomo Insurance Company travel policy in late 2019 for a trip he intended to take last year in the first two weeks of October.
When the flight was canceled, he requested a refund from the airline. Instead, she was offered a credit voucher that could be used to book another flight by the end of 2022. The airline declined a refund, claiming in an email that it was temporarily legally restricted. in processing the refund.
The man then submitted a claim for reimbursement of the flight costs and the insurance premium he had paid.
Mitsui Sumitomo said the trip fell under coverage because it was canceled due to government restrictions imposed after a pandemic.
However, he denied the claim on the grounds that the police would only respond if the expenses were not recoverable from another source. As the airline’s credit matched the full value of the flights, the traveler had not suffered any loss under the policy, the insurer said.
The man appealed to the Australian Financial Complaints Authority (AFCA) arguing that he had established a valid financial loss as the airline became insolvent and the credit offered to him was worthless.
AFCA said it was not convinced the airline would not be able to repay or honor the credit.
If the policy were to respond now, the man “could potentially be compensated twice for the flight costs” if he were to later use the credit voucher or get the refund, he said.
“I am not convinced that this result is fair or in line with the commercial intent of the policy,” said the AFCA mediator. “The policy is intended to cover irrecoverable travel loss and not to create a situation which lends itself to double compensation.”
The airline did not reject the refund request, AFCA said, only saying it was delayed.
He determined that Mitsui Sumitomo’s offer for the man to submit a claim only if his credit voucher expired or could not be honored by the airline was “fair in all the circumstances”.
“At this point, the complainant has not established an unrecoverable loss for the thefts, given the valid credit voucher and the potential refund available.
“If the complainant is not able to use the credit within the allotted time, or if the airline no longer honor the credit or refund, then I consider that this may then become an unrecoverable loss under the policy. “said the mediator.
“I am not satisfied, on the whole the loss is irrecoverable at this point, I do not consider it fair in all the circumstances to require Mitsui Sumitomo to cover the claim now.”
Theft costs could become an unrecoverable loss covered by the policy in 2023 after the credit period expires, AFCA said, so a premium refund was not appropriate as the policy could respond to the future.
“Considering the credit and a potential for repayment, I am not convinced that the complainant has established a loss which requires a political response now,” said the mediator.
See the full decision here.