The Fine Print Problem in Travel Insurance
23 Jan 2026 7:30 AM IST
Sachin is an IT consultant in Bengaluru.
Recently, he bought flights for his family, flying in from Delhi to visit him. Right before he paid, he decided to check that travel insurance option, just in case the flights got delayed or cancelled.
He says the flight did get delayed, but not by enough to actually file a claim.
Sachin is like many Indians who are now buying travel insurance. According to IRDAI, almost a crore Indians bought travel insurance in FY 2025. That’s a 91% jump from FY 2019.
But although many more people are buying travel insurance, they’re actually not getting their claims.
The ICR, or the incurred claim ratio, in this segment is particularly low. Just about 45% in the overseas segment and about 10% in the domestic segment. This means that for every 100 rupees an insurer earns in premiums, it pays out just about 10 rupees in claims in domestic travel insurance.
What’s really going on here?
To learn more, check out the latest episode of The Signal Brief, where we deep dive into why many more consumers are buying travel insurance, and why they often end up disappointed.
The Core produces The Signal Brief. Follow us wherever you get your favourite podcasts. To check out the rest of our work, go to www.thecore.in
NOTE: A machine transcribed this episode. A human has looked at this text but there might still be errors. Please refer to the audio above, if you need to clarify something. If you want to give us feedback, please write to us at feedback@thecore.in.
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TRANSCRIPT
Kudrat (Host): Sachin works as an IT consultant in Bengaluru. Recently, he booked flight tickets for his family, who were visiting him in Delhi. Just before he paid, he decided to add travel insurance to his cart.
Sachin: I made the booking via MakeMyTrip, and they had an add-on of say Rs 300 where I could get insurance on my flight tickets. So it covered a lot of things, but specifically talking about the delay or the cancellation part, it gave me a cover of around Rs 3,000 if the flight got delayed, and if it got cancelled, it gave me a coverage of Rs 4,000, which was almost 50 to 60% of the one-way flight cost.
Kudrat (Host): Sachin added that last year’s IndiGo disruptions, when thousands of flights got delayed or cancelled, pushed him to buy insurance. His flight did end up getting delayed, but not enough for him to make a claim.
Like Sachin, many more Indians are now buying travel insurance, especially for overseas trips.
According to IRDAI’s annual 2024-25 report, 96.7 lakh people got insured under 27.9 lakh overseas travel insurance policies. That’s a 91% jump from FY 2019, when just over 50 lakh people got overseas travel insurance.
Domestic travel insurance is also becoming more common, according to Meet Kapadia, Head of Travel Insurance at PolicyBazaar.
But travel insurance pays out a dramatically smaller share of premiums than almost every other major insurance category. IRDAI data on incurred claim ratios from the past three years shows that while most categories pay out 60 to 90% of the premiums they collect, travel insurance pays about 49% in the overseas segment. Domestically, it pays out just about 10%.
Kudrat (Host): My name is Kudrat Wadhwa and you’re listening to The Signal Brief. We don’t do hot takes. Instead, we bring you deep dives into the how and why of consumer trends.
In this episode, we look at how more Indians are buying travel insurance. Why is it that, despite that surge, the product often pays out far less in claims than other kinds of insurance segments?
Kudrat (Host): All kinds of insurance–-life insurance, home insurance, car insurance–-are becoming more mainstream in India, as people become more aware of risk.
Similarly, as more of us travel abroad, it’s harder to ignore risk. Delays, cancellations, medical emergencies, and even geopolitical shocks can derail plans. Travel insurance, then, feels like a small price to pay for peace of mind.
Meet Kapadia of PolicyBazaar says one big reason for the rise in overseas travel insurance is logistical. Many countries require travellers to buy it before granting a visa.
Meet: After COVID, awareness among travellers about medical emergencies that can happen abroad has gone up sharply. A lot more people have started getting travel insurance.
The second reason is that many travellers from India are now exploring Europe, especially via the Schengen visa route. And the Schengen visa process requires travel insurance even before the visa is issued. That’s another big reason why travel insurance is on the rise.
Kudrat (Host): We’ve all heard horror stories about healthcare systems in the West. You go in with a stomach ache, the doctor recommends a minor procedure. Nothing seems out of the ordinary, until you receive a bill for thousands of dollars because you didn’t have insurance.
In addition to understanding risk abroad, Indians are also becoming more aware of the risks involved in domestic travel.
Biswas: I’ll tell you one simple reason why travel insurance is increasing rapidly. It’s because of the airline crash that recently happened.
Kudrat (Host): That was Biswas, an insurance professional, referring to the June 2025 Air India crash.
Biswas: So now people understand..two events happened in a similar timeframe of around three to six months. One was the airline crash, now people understand the importance of insurance, especially travel insurance. And other is Indigo..and that’s when people try to understand what could help them.
Kudrat (Host): But, even as uptake grows, insurance professionals say consumers don’t always fully understand what they’re signing up for. And as a result, when people do file claims, many don’t see the benefits they expect.
The data reflects this too.
Travel insurance has particularly low incurred claim ratios, or ICRs, as I mentioned earlier. For domestic travel insurance, the ICR is around 10%. That means for every Rs 100 an insurer earns in premiums, it pays out just Rs 10 as claims.
For context, in recent years, life insurance has had ICRs in the 95 to 99% range, while health insurance ICRs have generally been in the 60 to 75% range.
Kudrat (Host): So why does travel insurance behave so differently from other kinds of insurance?
Meet: This has been a constant feedback which we keep on hearing from customers that the travel insurance did not work.
Kudrat (Host): Meet said that consumers often treat travel insurance as a check box product, which isn’t how they treat other insurance categories.
Rishabh Razdan, a claims manager at a private insurance firm, made a similar point.
Rishabh: Actually, one of the biggest challenges we face in travel insurance is that people don’t read the policy terms and conditions properly.
Kudrat (Host): Most of us don’t buy travel insurance the way we buy health or life insurance. We buy it as a last-minute add-on, while booking flights or hotels online, usually through aggregators like MakeMyTrip or Yatra.com.
And on these platforms, understanding what you’re actually buying isn’t easy.
Take MakeMyTrip. At checkout, you’re given a simple choice. You either “secure your trip” or you click “No, I don’t want to secure my trip.”
If you want to know what “securing your trip” actually means, you have to click a separate button. That opens a pop-up.
Inside that pop-up, there’s another link. Click that, and it finally opens a page titled Terms and Conditions.
And, most people never get to that page; it’s just too much hassle.
Moreover, since travel insurance premiums are low, in the 500 to 2000 rupees range, it means consumers don’t always feel they need to read the policy documents properly either.
But, let’s say something happens and you end up filing a claim. To get your travel insurance claims approved, you actually need to pass strict thresholds: your flight needs to be delayed by a specific number of hours, if it’s canceled, again, it has to meet narrowly defined conditions. In case you end up getting medical treatment, you may need to make sure you get extensive documentation from hospitals.
Miss one condition, and the claim won’t go through.
The Signal Brief spoke to Krish Desai, who co-founded The Insurance Bar, a company that helps consumers challenge denied claims. He said that his firm hasn’t seen many wrongful rejections in travel insurance.
Meaning that most rejections happen because people don’t read terms and conditions.
He also added that another reason for this segment’s low ICR is the fact that premiums are low.
Krish: Now the biggest game over here is that most people do not claim, right. People do not know what the process is. People do not know their coverages, and people usually forget. That is what happens in India. Again, India is a place where insurance is still having a tough time and is not taken seriously. Even if someone has paid Rs 500 or Rs 1,000 from their pocket, people usually forget that they have this coverage available with them and that they can claim and get the rightful amount. So they forget.
One of the primary reasons for the lower ICR is that maximum claims are not filed at all. That is why the premium amounts are at the higher end and the claims paid are at the lower end.
Kudrat (Host): To recap: more Indians are buying travel insurance. But this segment has a low incurred claim ratio, meaning insurers collect far more in premiums than they pay out as claims.
That happens partly because premiums are low, so people forget to file claims. And partly because policies are narrow, and many incidents just don’t meet the required conditions.
Of course, it’s easy to place the blame squarely on consumers. But, there’s a deeper structural issue here too. The language of insurance itself. It’s too dense and filled with jargon. Biswas said that companies employ that strategy on purpose.
Biswas: What I’ve figured out is that insurance companies do not want customers to fully understand the policy. That’s point number one. The reason is very simple. If people start understanding the entire policy, there will be an increase in the claims ratio.
Krish of The Insurance Bar said that regulators are trying to address this, but the challenge is scale.
Krish: IRDAI and the government are bringing in more and more educational initiatives, which will definitely impart more education to the public at large. They try to explain to people via advertisements and everything as well that never fall free to insurances and all. Read the terms and conditions, read your policy preface, and then understand the product and buy the product. Though this is not going forward at a large scale as of now, it will take time. We can understand that it is very difficult to reach out to 140 crore people in the country.
Again, they are even enforcing all insurance companies to curb mis-selling through their agency part and through their bancassurance part. They are primarily asking them to explain the product first and then sell. However, it is very difficult to keep checks and balances in each and every phase. It is not going to completely get over, but it will definitely reduce after good practices, which they are doing right now.
Kudrat (Host): In the meantime, consumers often have to navigate travel insurance policies on their own. Companies like The Insurance Bar can help if an insurer has denied your claim wrongfully. Meaning if your incident is covered under the insurance’s terms and conditions. But they can’t do much if the policy doesn’t cover it.
That doesn’t mean we avoid insurance. It just means we approach it with more preparation.
Krish: One great request to everyone who is listening to this is to read your policy terms and conditions before buying your insurance. Do not just buy insurance for the sake of it. Do not buy it just because it is only for Rs 500 or a small price. Do not buy it without reading the policy conditions. Read and go through websites like policybazaar.com or other web aggregators. Compare the products there, and if you find a good product, then only buy it. Compare three to four company products so that you get a wider perspective and a better idea. Even look into their claim ratios and claim pay ratios so that it usually helps you decide what exactly product you need to buy.
Outro: That's all for today. You just heard The Signal Brief. We don't do hot takes. Instead, we bring you deep dives into the how and why of consumer trends. The Core produces The Signal Brief. Follow us wherever you get your favourite podcasts.
To check out the rest of our work, go to www.thecore.in.
If you have feedback, we'd love to hear from you. Write to us at feedback@thecore.in or you can write to me personally at kudrat@thecore.in.
Thank you for listening.
