Ashley Seager’s expensive NatWest policy failed to pay out, so he complained to the ombudsman – only for the label of quality to be dismissed as ‘meaningless’

NatWest’s travel insurance was one of the main reasons that I, like so many other of the bank’s customers, have an Advantage Private account. For an annual fee of £240 it says it is “packed with exclusive features”, chief among them its five-star Defaqto-rated annual worldwide travel insurance, which the bank claims is worth £160 alone.

Last year, I put it to the test. I took my family to Canada on holiday – only to be stranded by the collapse of Zoom Airlines. But instead of the insurance kicking in and returning us home, NatWest refused to pay out. To my surprise – and cost – it said the insurance did not cover the failure of a scheduled airline.

Furious, I took my case to the Financial Ombudsman. Surely, I argued, “five-star” had to mean that it was a fully comprehensive policy that would cover me in most eventualities – such as, in my case, a scheduled airline going bust. After all, NatWest proudly displays its five-star rating prominently over its literature for the Advantage Private account.

A year later, I have finally had my complaint judged by the ombudsman. He has found in favour of NatWest, and I won’t be getting any compensation. But the reason why I’ve been rejected makes for interesting reading. The ombudsman, it appears, thinks that the five-star ratings that financial companies use to promote their products are entirely meaningless.

“I do not consider that there is any common agreement as to what the phrase means. In my judgment the term “five-star” has no specific meaning and amounts to nothing more than “puff”,” wrote ombudsman Reidy Flynn in her judgment.

I contacted the ombudsman’s office to discuss the lack of logic, but it declined to comment. Its basic judgment is that the Natwest Advantage Private bundled account with its five-star travel insurance was not obliged, in any way, to cover for the failure of an airline, or any other transportation company. I should have read the small print, no matter how small.

My complaint had made the following points: that it was unreasonable that a five-star policy did not cover airline failure – any normal person would expect to have such a thing covered if they were travelling abroad; that it was unreasonable that such an exclusion would not be on the list of “significant exclusions” at the front of the policy; and that it was unreasonable that it should be buried in the small print.

I had tried to find out, prior to travelling, whether this point was covered but could not get through to NatWest on the phone, or find the relevant documents on its website. I could not find the documents at home, either, although NatWest insists they were sent. So I relied on the “five-star” rating, thinking it sounded good.

I have since learned that across the insurance industry not many policies cover airline failure. But the Post Office does, and that’s not an obscure little company. It would have cost £1-1.50 per person for NatWest to cover their policy holders for a year against airline failure. Was it reasonable to expect them to have done so for its premium account customers? You might think so, but NatWest did not, nor did the ombudsman.

Defaqto was bemused by the ombudsman’s comments. “I am surprised it has couched it in those terms,” said its head of research, Brian Brown. “Our ratings are independent but do not purport to offer any kind of legal guarantee of what a product may contain. People should check the details.”

He denied that banks and insurers pay a fee to Defaqto to use their ratings, implying the company was biased towards issuing “five-star” ratings. He added that the company only issued five-star ratings on 10-12% of products and no comnpany pays to appear in its analysis. The bulk of its revenue comes from a business-to-business database it compiles and sells to banks and insurers.

Perhaps, though, if the ombudsman service thinks five-star ratings are meaningless and “puff”, it, or another authority, should move to ban them? That’s the only conclusion a reasonable person could reach.

Specialist policies for older travellers can be tempting, says Harriet Meyer, but it’s always worth looking around

Autumn is a prime holiday time for older people, with plenty of bargain breaks available once children have gone back to school. But while travel costs might be lower, finding reasonably priced travel insurance that provides the cover you need when you are in your 50s or older can prove a challenge.

The older you get, the more care you should take when picking policies, as the launch of a new product this month from Staysure.co.uk, aimed at the over-50s, demonstrates.

This claims to be up to five times cheaper than its rivals and to cover 220 medical conditions at no extra charge – with prices starting at about £14 for a 50-year-old couple on a seven-day trip to Europe. It will provide cover for those aged up to 85 on single policies, and 81 for annual cover.

“The claim that they cover so many pre-existing medical conditions might look impressive, but on closer inspection it comes across as more of a marketing tactic than a true differentiator, as most of the conditions are minor ailments that wouldn’t trouble the average travel insurance underwriter,” says Lee Griffin, business development director at the comparison site Gocompare.com.

“Among the conditions covered are toothache, stomach bug and the common cold; there is no mention of conditions that are of greater concern to the over-50s, such as heart complaints, stroke or cancer – these will be charged an additional premium, just like many other policies.”

However, Ryan Howsam, chief executive at Staysure.co.uk, defends the policy: “As well as including protection for 220 medical ailments including blindness, broken bones, hernias and hip replacements as standard, the policy can be tailored for travellers with more serious conditions including diabetes, stroke, heart conditions and cancer following a simple medical screening process.”

The company will require further information on conditions that have occurred in the past two years.

According to Gocompare.com, a 50-year-old couple travelling to Spain for two weeks on a single-trip policy would pay £19.05 with Staysure.co.uk, with an additional £5.72 for cancellation cover.

“The same couple could find a standard single-trip policy from £16.96, which includes cancellation cover from a standard insurer,” says Griffin. “Of course, in some situations this provider will be cheaper – but it does not always offer the best deal, so it’s vital to compare policies.”

Travel insurance for the over-50s is a growing product area as the UK population gets older, according to Steven Williams, the head of travel insurance at the comparison website Confused.com. Even so, he adds, people who are over 50 are still likely to pay higher premiums than their younger counterparts, and that situation is not likely to change any time soon.

It is worth scanning the whole market when picking a policy rather than sticking to a specialist – many standard providers, such as Marks & Spencer, offer competitive products – although Saga, Rias and Age Concern are some that cater for the older traveller.

Joe Young, from Age Concern Insurance Services, says: “Our cover is tailored for the needs of older travellers, so there are no upper age limits and we aim to cover pre-existing medical conditions if possible.”

The cost of travel insurance rises sharply once you are over 65, with typical annual premiums often exceeding £100 – yet it is crucial to avoid focusing simply on the price and to check the medical, baggage and cancellation cover as well, as many policies contain exclusions and caveats.

Mark’s & Spencer’s travel policy is a good example: a 70-year-old in good health would pay £148 for worldwide cover including the USA, Canada and Caribbean, quite a high premium.

But Williams says the extra cost is worth paying because the policy offers a good level of cover, although it does require additional screening for serious health conditions, such as cancer, suffered by the policy applicant in the past 12 months. This can be done online or over the telephone.

He adds: “The amount of cover is more than on a standard policy: you get up to £6,000 of cancellation cover – with the average being between £2,000 and £3,000 – baggage cover at £2,500 and £10m medical cover.”

Holidaymakers should also remember that if they want to travel for more than 45 days on any one trip or have pre-existing medical conditions, they must always check with their insurer before assuming they are covered. While it might require an additional “top-up” payment, failing to deal with these issues in advance can lead to claims being refused.