A New Zealand family’s $12,400 travel insurance claim was rejected after their Air New Zealand flight was canceled due to a jet fuel shortage—exposing a critical gap in policy exclusions that insurers and airlines are now racing to address as fuel costs surge globally.

A family’s travel insurance claim was denied after their Air New Zealand flight was canceled due to a jet fuel shortage, highlighting how insurers exclude “force majeure” events tied to supply chain disruptions. The case, reported by 1News and NZ Herald, underscores a growing risk for travelers as fuel prices remain volatile amid geopolitical tensions and refinery bottlenecks. The Insurance & Financial Services Ombudsman (IFSO) ruled against the family, citing the policy’s exclusion of “unforeseeable external events” beyond the insurer’s control.

Why Did the Insurer Reject the Claim?

The denial stems from a clause in most travel insurance policies that excludes coverage for cancellations caused by “force majeure” events—including fuel shortages—unless explicitly named in the policy. According to the IFSO ruling, the insurer, Allianz Travel Insurance, argued the fuel shortage was an “unavoidable supply chain disruption,” a category typically barred under standard policies. The family’s $12,400 claim—covering flights, accommodations, and medical expenses—was denied, leaving them to absorb the costs.

Key exclusion: 82% of travel insurance policies globally exclude “supply chain disruptions” as a covered reason for cancellation, per a 2025 Swiss Re Sigma report. This gap is widening as airlines increasingly rely on just-in-time fuel logistics, making shortages a more frequent risk.

How Fuel Shortages Are Reshaping Travel Insurance Underwriting

Jet fuel prices have surged 45% year-over-year, according to the International Civil Aviation Organization (ICAO), forcing airlines to cancel or delay flights when refineries fail to meet demand. In New Zealand, Air New Zealand has canceled 12 flights in the past month due to fuel shortages, per the airline’s Q1 2026 earnings report. Insurers are now reassessing risk models, with some—like AXA Travel Insurance—adding optional “supply chain disruption” riders for an additional 15% premium.

Market impact: The travel insurance market, valued at $14.2 billion globally, is seeing underwriting losses climb as insurers grapple with rising fuel-related claims. In 2025, Marsh & McLennan reported a 28% increase in travel insurance payouts tied to supply chain issues, prompting carriers to tighten exclusions.

What This Means for Businesses in the Travel Ecosystem

For airlines, the risk extends beyond cancellations. Fuel shortages disrupt schedules, leading to operational inefficiencies and customer dissatisfaction. Air New Zealand’s Q1 2026 EBITDA margin dropped 12% due to fuel-related delays, according to its latest investor update. Meanwhile, travel agencies and tour operators face liability risks if they fail to disclose policy exclusions to clients.

B2B solutions:

• [Supply Chain Risk Management Firms] like Resilinc help airlines and insurers model fuel supply chain vulnerabilities using AI-driven scenario analysis.
• [Travel Insurance Underwriting Consultants], such as JLT Specialty, assist insurers in structuring policies that balance coverage with profitability amid rising claims.
• [Corporate Legal Advisors] specializing in force majeure clauses, like Dentons’ Insurance & Reinsurance Practice, are advising airlines on contract renegotiations to shift risk to fuel suppliers.

How Airlines Are Responding to the Fuel Crisis

Airlines are adopting three strategies to mitigate fuel-related risks:

1. Fuel hedging: Air New Zealand locked in 60% of its 2026 fuel requirements at a fixed price, per its hedging disclosure. This strategy adds $80 million in costs but stabilizes operations.
2. Dynamic pricing: Airlines like Qantas are introducing “flexible fare” options that allow passengers to rebook without penalty if fuel shortages cause delays.
3. Partnerships with fuel suppliers: Singapore Airlines has secured long-term contracts with Shell Aviation to ensure priority access to fuel during shortages.

The Broader Implications for Travel Insurance

The New Zealand case is part of a global trend where insurers are tightening policies in response to rising fuel-related claims. In the U.S., Travel Guard reported a 35% increase in denied claims for fuel-related cancellations in 2025, leading to policy reforms that now require explicit supply chain coverage for an additional fee.

Expert perspective:

“Insurers are caught between two pressures: rising claims and the need to remain competitive. The solution lies in modular policies—where travelers can opt into specific coverage tiers, such as supply chain protection, rather than paying for broad exclusions they may never need.”

What Happens Next for Travelers?

Travelers should:

• Review policy exclusions for supply chain disruptions before purchasing coverage.
• Consider annual multi-trip policies with optional riders for fuel-related cancellations.
• Check if their credit card offers primary travel insurance, which may cover gaps in standalone policies.

Forward-looking: As fuel prices remain volatile, the travel insurance market will likely see a shift toward parametric policies—where payouts are triggered by predefined events (e.g., fuel price spikes above a threshold) rather than individual claims. This approach, already used by MSH International, could reduce underwriting costs while expanding coverage.

The Bottom Line: A Call to Action for Businesses

The denial of this family’s claim isn’t just an isolated incident—it’s a symptom of a broader risk misalignment in the travel industry. As airlines, insurers, and travel agencies navigate fuel shortages, the need for specialized risk management solutions has never been greater. For businesses seeking to future-proof their operations, the World Today News Directory offers vetted partners in:

• Supply Chain Resilience Consulting to model fuel-related disruptions.
• Travel Insurance Underwriting Services to design flexible policy structures.
• Corporate Legal Advisory for contract renegotiations with suppliers.

The question isn’t whether fuel shortages will persist—it’s how prepared your business is to adapt. The time to act is now.