Rivals' lack of support forces RBS into U-turn on T5 cover

Rivals' lack of support forces RBS into U-turn on T5 cover

Direct Line and other insurers in the Royal Bank of Scotland group have been forced into a humiliating climbdown from their refusal to cover passengers at Heathrow's notorious Terminal 5 after RBS failed to convince rival insurers to follow suit.

The group, also including Churchill, Tesco and Privilege, withdrew cover for T5 passengers for risks such as lost baggage and delays earlier this week.

The terminal became notorious for lost baggage and cancellation chaos as soon as it opened, exemplified by model Naomi Campbell's problems - she described herself as a "T5 baggage martyr" after she was arrested following a "disturbance".

The RBS ban only applied to those who had bought policies since T5 opened. RBS justified its stance saying insurance does not apply if policyholders knowingly put themselves in peril.

"We can only pay out for events the customer is unaware of at the time of purchase, not for those that have happened. We don't cover medical conditions existing when the policy is taken out, for example," it says.

But RBS, which has a 16% market share, failed to carry the rest of the travel insurance world with it.

Norwich Union, a major travel insurer, hit back saying: "We will cover customers for delays and lost baggage at Terminal 5. We are not making any changes to exclude claims from T5 policyholders as we don't feel that this would be treating customers fairly. We don't think it is fair to penalise customers for problems.....continued below

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at Heathrow as they often don't have a choice of which terminal they fly from."

At Mondial Assistance, part of the Allianz group, Steve Hook condemned the Direct Line move as "adding misery for travellers".

He cites similar lost baggage and cancellation chaos at the high-profile opening of Hong Kong's Chep Lak Kok airport in 1998. "No one withdrew cover then," he adds. "When T5 opened, it should have been easy to assume there would be teething problems, although perhaps not on the scale that happened. We have no intention of changing our terms."

Christian Young, chief executive of AA Travel Insurance, says: "Withdrawing cover at a time when customers rely on their travel insurance seems an extraordinary step." The AA, which uses RBS as an underwriter, refused to add extra clauses to its policies.

And at Saga, Lisa Harris said: "Any decision to introduce new exclusions for customers travelling from T5 is, in our view, an assault on common sense."

Faced with no support from competitors and disastrous publicity, the RBS insurance group had little choice but to back track.

In what it called a "clarification", it said: "As a gesture of goodwill, Direct Line (and other insurers in the group) will be taking a sympathetic view of claims against flight disruptions or lost and delayed baggage at T5 since its opening - irrespective of when the policy was bought. We have so far agreed to pay all claims for lost luggage. We have changed our stance as British Airways says the terminal is now operating normally."

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