Red Sea Unrest: Insurer Denies Cruise Cancellation Claim

2

The cruise, initially booked for the previous October, was cancelled due to "ongoing unrest." While the holidaymaker received a credit voucher for the cruise, he had already altered his plans and incurred extra expenses. Southern Cross outlined that their policy excludes coverage for disruptions caused by conflicts, such as "acts of foreseeable violence" and "military operations."

The insurer elaborated that the cruise company's reference to regional unrest was tied to Middle Eastern hostilities, namely Israeli military actions in Gaza and Houthi movements targeting ships. The policyholder was forewarned of the non-coverage should regional hostilities impact the cruise itinerary.

Challenging the insurer's position, the claimant approached the Australian Financial Complaints Authority (AFCA), arguing that the term "unrest" should not fit the war and violence exclusion, stating that cruise vessels were not explicitly targeted. He noted that any violent incidents were mainly concerning cargo ships, suggesting no direct threat to passenger cruises.

AFCA's investigation clarified the circumstances, highlighting that, at the time of cancellation, American naval forces were actively escorting commercial ships in the area, engaging in combat with Houthi forces on occasion. The authority remarked that numerous shipping operators were side-stepping the region due to these threats, which are linked to hostilities involving the Houthis and Israel's warfare in Gaza.

An AFCA ombudsman aligned with the insurer's stance concluded that the regional situation exceeded mere unrest. The presence of US Navy activities was deemed indicative of military operations or foreseeable violence. Continuous Houthi aggressions were classified under foreseeable violence, justifying the insurer's denial of the claim.

Published:Friday, 20th Jun 2025
Source: Paige Estritori

Share this news item:

Insurance News

Clear

AFCA Sides with Policyholder in Storm Damage Dispute 18 Jul 2025: Paige Estritori A recent ruling by the Australian Financial Complaints Authority (AFCA) has favoured a policyholder in a dispute with insurer Auto & General over storm damage. The case involved a collapsed ceiling, initially attributed to a storm by the insurer before an about-face led them to deny the claim. The AFCA decision marks a significant instance where consumer protection mechanisms have countered an insurer's attempt to deny coverage. - read more

Transforming Home Insurance: The Rise of the Home Energy Revolution 17 Jul 2025: Paige Estritori The landscape of home insurance policies in Australia stands on the brink of transformation as an increasing number of homes, apartment complexes, and small businesses are projected to integrate solar panels and battery systems by 2050. According to a report from the actuarial consultancy Finity, these homes will evolve into independent power stations, generating and storing their own electricity, marking a pivotal shift in home energy management. - read more

Life Insurers Reevaluate Amid Rising Mental Health Claims 16 Jul 2025: Paige Estritori In a growing industry concern, the Council of Australian Life Insurers has highlighted an alarming increase in mental health-related claims, which are now the leading cause of total and permanent disability (TPD) claims. The rise has driven insurers to reconsider their current practices and strategies to address this trend. - read more

QBE Highlights the Importance of Adequate Landlord Insurance 15 Jul 2025: Paige Estritori Landlords in Australia have been advised by QBE Insurance Group to reassess their insurance coverage, following survey findings that indicate many could encounter financial hardships if their rental operations are interrupted. According to QBE's data, 38% of landlords might face financial challenges should their properties become uninhabitable or rental payments cease for a duration of two to six weeks. - read more

Court Denies E-Scooter Negligence Allegation Against City Council 14 Jul 2025: Paige Estritori An Australian court recently ruled in favour of the City of Joondalup, rejecting a negligence claim lodged by an injured e-scooter rider. The Western Australia District Court found the city not liable for an accident involving insurance broker Kirstin Leibbrandt, who collided with a fence post while riding an e-scooter in the Perth suburb of Hillarys. - read more