When flight delays are down, but complaints are up: how customers have to deal with airlines and insurance companies

4 min readMar 30, 2021
Photo by https://unsplash.com/@starocker

Most of the insurance companies are offering travel insurance now. But many clients have issues with their payment when their flight is delayed or cancelled. According to some experts, Airlines might soon reinstate change fees on their lowest fares. This cost will probably push customers to buy more travel insurance to cover any potential delays and get a refund. With more customers flying as COVID is slowly being controlled, the number of travelers might create more delays. How can you get refunded faster?

Flights can be delayed, but payments by your insurance companies too.

We know that operating a flight is a challenge mostly because of the different people involved. Airlines can control certain factors like aircraft turnarounds between flights, passenger punctuality, technical and crew performance, etc.

But a number of other factors are outside of the airline’s control, such as weather, air traffic control, security, airport conditions, etc.

When your flight is delayed, and if you are insured how can you get compensation?

Contrary to the EU, the U.S. does not propose any regulation protecting passengers with flight issues. “In the United States, airlines are not required to compensate passengers when flights are delayed or cancelled. Compensation is required by U.S. law only when certain passengers are “bumped” from a flight that is oversold. However, passengers flying between or within foreign countries may be protected from flight delays and cancellations by the laws of another nation.

The airline passengers don’t have as much protection in the U.S. than in the EU, but the U.S. Department of Transportation (DOT) does provide compensation in some instances for:

● Delayed and canceled flights

● Overbooking

● Baggage loss

Most of the time, the clients have to deal with the airlines or their insurance companies to receive compensation and it can be very long. An airline delay is becoming a bigger problem between clients and insurers. 30 days are usually needed from reporting a claim to a final decision.

ValuePenguin presented recently an interesting report on what frustrates people most about their insurer. The results are pretty eloquent: customers complain about delays and claim handling.

Even if flight delays are going down, the number of complaints is still very high.

According to the latest Air Travel Consumer Report from the DOT, the 10 primary mainline U.S. airlines are on time 90% of the time, compared to just 76.9% in July 2019. But the pandemic increased the number of complaints to request a refund.

In July 2020, the DOT received 10,257 complaints about refunds compared to 187 the previous July. The request for refunds amounted to more than 90% of the total air travel-related complaints the DOT received in July.

Refunds were a main issue for airlines companies early in the pandemic, as they cancelled up to 90% of their schedules and had to look for ways around federal requirements to provide refunds for cancellations when requested.

Parametric insurance

Parametric insurance is now emerging as a great tool to provide financial protection against troubles that are sometimes hard to get insured for like flight delays. Parametric insurance solutions have been established products for some time and represent now more than 15% of underlying in issued catastrophe bonds in several hundreds of billions of US$ market. Parametric insurance is a product that pays out when a predefined loss event occurs. For example, if a flight is delayed by a specific amount of time that was pre-agreed to in the policy, the insured will be paid. One of the main advantages to an insured are that the insurer knows how much the policy is going to pay out before the loss. The claims are settled independently in a matter of minutes and the insured gets paid out faster than with traditional insurance.

With OTONOMI, we are offering a new way to handle claims for air transport, travel, and cargo delays by using our parametric product. Our smart contract-powered claim automation system can automatically activate the client’s insurance policy and directly pay compensations on the customer’s bank account, in less than 1 hour.

Welcome to the OTONOMI future!

Stay well


OTONOMI is a B2B SaaS for insurance carriers. Our platform drives efficiencies in operations by automating claims, saving insurance over 50% in administrative costs. As a result, we eliminate the claim process for a better experience for the policyholders and outperforming combined loss ratios for insurance partners. We are working in the transportation, logistics, and mobility industries.




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