The High Loonie Is Good News for Travel Insurance Buyers

With the Canadian dollar now breaking par with the US greenback, travellers can expect solid economic benefits when taking trips out of the country—and not just to the US. My advice to you is: actively look for bargains.

Travel insurers, tour operators, and even Canadian airlines are all in the same boat when the Canadian dollar fluctuates. When the dollar is low in relation to the US dollar they take a beating because they collect their fees in Canadian loonies but still have to pay out high US rates to hospitals, hotels, restaurants, airports, etc. But now that the Canadian dollar is occasionally breaking upward of the US dollar and is estimated by banking experts to stay in the range of US $0.95 to $1.03 for the foreseeable future, you are the beneficiary.

All travel sectors—tours, travel insurance, airfares, etc.—are sectors with high competition and razor-thin margins.

If suppliers can find room to cut their fees to get your business, they will. That’s why, for this next summer’s travel season and even for next year’s snowbird season, you should shop around, look for bargains and early bird specials, and keep your eye on the daily currency exchange rates. They matter.

When a travel insurance company pegs its premiums for the coming season, it looks to risk assessment: What will their average doctor and hospital bills be if they have to pay out medical costs in a foreign country? If those services will cost less in terms of Canadian dollars, they have some flexibility to keep your premiums down. They may not reduce them, but they may defer any increases they had been thinking about.

Also, your benefits may extend not only to the US, but to Europe and the Caribbean countries.

For example, the US $100 per person, per night Bahamas hotel room that was negotiated in February 2010 would have cost the tour operator $104.17 CAD at the time. Now it may cost the operator $99.50. This is a 4.5 per cent savings. Try to get a piece of that. Remember that when negotiating for rates abroad, Canadian tour operators usually negotiate in US dollars.

During the summer of 2010, Canadian travel to Europe grew by more than 10 per cent as the dollar gained strength against both the euro and the British pound (GBP). Between January 1, 2010, and January 1, 2011, the loonie gained 13.8 per cent in value against the euro and 7.4 per cent against the GBP.

Shop around and get your share.

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