I'm suddenly reminded of American folk legends Peter, Paul and Mary's soothing song about “flowers.” Cross-border living is one of the most difficult situation to be in but Snowbirds sure are tough for having gone through what many people would not have dared go through. At least 2015 remains a memorable year for their lot.
Snowbirds may not be able to enjoy the perks they once enjoyed for the past 10 years with the Canadian Dollar dropping to levels not hitherto seen before. Certain changes to the snowbird lifestyle had to be made, which meant cutting back on fancy meals and side trips. From a meager $0.63, the Canadian dollar has risen to whopping figures year after year since 2002, giving the United States' inflation rate a run for its money. Each year sees a mark improvement in the snowbird lifestyle, however. The dollar rolled back to $0.80 during the 2008-2009 travel season but in the years before and after this period, $0.95 became the normal dollar value. Financially savvy individuals got to save more by purchasing at the right time with the right travel insurance provider.
Snowbirds had the surprise of a lifetime when the dollar retreated to $0.80 for the second time in years just as the 2014-2015 travel season kicked off. Collapsing oil prices, which mirror the trading movement of the Canadian dollar, may have directly contributed to this roll back. The budgeting all but took the wind out of their finances while they were off elsewhere. What is interesting to note is the fact that 2014-2015 appeared to be the worst claims season in history. Insurers losing millions became commonplace. No one really knows whether the dollar retreat had anything to do with the drastic increase in claims but that could very well be possible. The fact that snowbirds operate on fixed incomes doubles the pressure on their lifestyle. Fixed income investments are at multi-year lows particularly in the aspects of interest and dividend revenue. Moreover, seniors and snowbirds affected by the under-performing Canadian dollar couldn't even be redeemed by a 1 percent GIC rate.
Now let's talk about travel insurance costs. Rates have increased during the 2014-2015 travel season. Most snowbirds managed but it was a different story when they had to move to a Higher Age Band where prices go up. 20 percent of snowbirds move up to a higher age band every year. The snowbirds were on equal footing with their insurers, who were likewise caught in this dilemma. Prices may initially be set at around $0.90 but once claims were raised, insurers had to cover those claims on an $0.80 rate. Imagine a loss of $10-15 million or more for a travel book of $100 million. The next travel season would not be free of dramatic price increases. Insurers will try to offset the dollar issue by increasing premium rates. Others couldn't even wait a year and had to levy an increase after just a few months. Snowbirds had to contend with more or less 30 percent increase in travel medical insurance, rental and lifestyle costs with their fixed Canadian-dollar income.
The statistics have already told the story. Medipac's consistent 8-12 percent policy count growth has been interrupted. Although insurance revenue continues to increase due to premium increases (a necessity to cope up with the indomitable U.S. dollar), number of policies written between January and August 2015 has dropped, according to the Conference Board of Canada. Overnight trips to the United States decreased by a million and a great chunk of these were snowbird trips. Automobile trips to the U.S. plummeted to 8.5 percent around the same time. The declining rates are just astounding.
This upcoming travel season, Medipac will be marked by fewer snowbird policies, decreasing to 4 percent from an average annual increase of more than 10 percent. What a difference a 14 percent shift makes! There were several efforts to reduce costs from calls requesting to cut short their annual trip length to those hoping to increase their deductibles from the previous year. The ratio between snowbirds looking to increase their trip length and snowbirds forced to trim down the length of their trips is 1:3. More are left with little choice but to embark on short trips instead of lengthy ones.
Texas, then Florida, had the large percentage of reduced number of trips and trip lengths. Travels to Arizona and California have – to no one's surprise – continued to soar. The under-performing dollar, surging insurance costs and rising interest rates do not seem to have an impact on these “upscale” markets.
What a blessing to know (after all these years) just how resilient snowbirds are. They have a keen sense of adaptability and will soon be embracing the new “normal” without any real impediments to their lifestyle. There are certain exceptions, though, and they are the snowbirds who bought homes below the U.S. housing market and are now reaping between 30 and 50 percent gains. Not only have they doubled their money after conversion but a number of them have even considered selling their properties. It is likely that they'll return to being snowbirds – and renters – who will make the most out of their increased assets to improve their lifestyle.
That's the way to go, snowbirds!
This post first appeared on Medipac Blog - Medipac Travel Medical Insurance Fo, please read the originial post: here