What Travel Insurers Don't Want You to Know

Asteroid Editorial Team

There is a reason your travel insurance card has a fine-print phone number and a different company name on the back. The industry has a secret it does not advertise: the company that sold you the policy probably has no idea what to do when you actually need it.

Here is what they do not tell you at purchase.

1. Most Insurers Outsource the Hard Part to Someone Else

When you buy a travel insurance policy, you are buying a promise. What you may not know is that the company making that promise often cannot keep it on its own.

Travel insurance's dirty secret is the TPA — the Third Party Administrator. When you call the emergency line at 2 a.m. from a hospital in Miami or Munich, you are not talking to your insurer. You are talking to a TPA: a separate company hired to do the real work of finding care, authorizing treatment, coordinating with hospitals and managing your case.

Why does that matter? Because insurers are in the business of selling policies, not managing emergencies. Statistically, only about 5% of policyholders ever use the service. So the math is simple: outsource the complicated part, keep the premium. The TPA market is full of companies serving dozens of travel brands simultaneously, with no loyalty to your specific insurer — or to you.

The incentive structure deserves to be understood clearly: many TPAs are paid to contain costs. That means steering you toward cheaper care, questioning authorizations, delaying approvals and finding reasons to deny claims. They are not evil — they are optimizing for the wrong metric.

Why Asteroid is different: Asteroid was founded by the people who run the TPA. MDabroad, Asteroid's operational backbone, spent years as the TPA other insurers hire. We know exactly how this system works because we built it and ran it for them. When you call Asteroid, you are calling the company that does the work — not a middleman hired to minimize the cost of doing it.

2. The Reimbursement Model Is a Trap

Here is how most travel insurance works in practice: you get sick or hurt abroad, pay the hospital bill out of pocket, keep every receipt, fill in the claim forms when you get home, wait 30 to 90 days, and only then find out whether you will be reimbursed — and for how much.

This is the reimbursement model. It is, politely, a disaster for travelers.

A three-day hospitalization in the United States can cost US$15,000 to US$37,000. An ambulance alone runs US$1,300 to US$4,600. Very few travelers can advance that kind of money and wait months to get it back. And reimbursement claims are where insurers hold the most leverage: they can dispute the necessity of the treatment, question the reasonableness of the costs, apply deductibles and co-pays you forgot were in your policy and — most frustrating of all — take as long as they like.

The standard to look for is direct payment and direct coordination. Real travel insurance should be able to call the hospital, establish a payment guarantee, and get you treated without you swiping a card you cannot afford.

What Asteroid does: In most cases, we pay providers directly. Our MDabroad team contacts the hospital or clinic, verifies your coverage, issues a payment guarantee and coordinates your care. You focus on getting better. We handle the paperwork.

That is not always possible — some providers, especially in smaller cities or remote areas, demand payment upfront. But in most major destinations, with our accredited provider network across 162 countries, direct coordination is the norm, not the exception.

3. They Don't Want You to Use the Service

This is the one nobody says out loud.

Travel insurance is sold on the premise of protection. But the business model only works if most people never file a claim. The industry's average loss ratio — the percentage of premiums paid out in claims — hovers between 30% and 50% for most travel insurers. That means for every $100 collected in premium, only $30 to $50 goes back to the insured people who actually need it.

The other $50 to $70? Operations, commissions, marketing — and profit.

That is not a conspiracy. It is math. And it shapes every decision an insurer makes about how to handle a claim.

When you call a travel insurance emergency line at midnight from a hospital in Lisbon, you are entering a system optimized — however unconsciously — to reduce payouts. The questions you are asked, the documentation you are required to provide, the deadlines you are given, the definitions buried in your policy — all of it creates friction. Some of that friction is legitimate process. Some of it is friction strategy.

The claims denied most often are not fraudulent. They are legitimate claims from travelers who did not know they needed pre-authorization, or who sought treatment at an out-of-network provider, or who described their condition using the wrong words on a form.

The industry term for this is "Claims Leakage Prevention." Your term for it is probably less polite.

Why Asteroid is different: We were built by the people who pay the claims. MDabroad's entire business model depends on routing insured travelers to care quickly and resolving cases efficiently — because that is what our insurer partners pay us to do. When Asteroid customers have a medical emergency, our MDabroad team proactively contacts the hospital, authorizes treatment and manages the case. We are not waiting for you to fill in paperwork. We are not hunting for reasons to deny.

We want you to use the service. Every resolved case is proof the model works. Every claim paid on time is a broker referral and a renewal.

Aligned incentives are rare in insurance. Ours point the right way.

The Bottom Line

The travel insurance industry built itself around low claim probability and high premium volume. That math works very well for shareholders. It works less well for the family in an Orlando hospital at midnight, trying to figure out who to call.

Ask your insurer three questions before you buy: 1. Who actually handles my emergency — you, or a TPA? 2. Do you pay providers directly, or do I pay and claim reimbursement later? 3. What is your average claim resolution time, and where is it documented?

If they cannot answer all three clearly, keep looking.

Asteroid was built by the people who answer those questions professionally. We know what good looks like. We built the product around it.

The Coverage Limits That Actually Protect You

Beyond the business model, there is the coverage itself. Most travelers underestimate the cost because they have never seen the bills:

• USA/Canada: USD 250,000 minimum. A heart attack with angioplasty and 4 days in the ICU easily exceeds USD 200,000. Anything under USD 250K is not travel insurance — it is a false sense of security.
• Europe: USD 100,000 minimum. The EUR 30,000 Schengen minimum covers about 25 days of hospitalization in Italy. A medical evacuation home from Rome costs EUR 20,000–EUR 50,000 on its own.

Watch the sub-limits: many policies advertise "coverage up to US$55,000" but cap individual procedures — surgery at US$3,700, ICU at US$900/day, evacuation at US$5,500. Read the fine print.

Ready to see the difference? Get a quote in 60 seconds and experience what travel insurance always should have been.

Carlos Werneck is the data and investigative writer at Asteroid Assistance. He spent 8 years covering insurance and consumer protection for major financial publications before joining the Asteroid editorial team.