Opinion from an economist friend: About Insurance

I believe it is non-ethical for any insurance company to participate in this mandatory scheme. The insurance companies have no data on which to base the estimate of costs they will have to cover. No one can possibly estimate, in advance the share of tourists, with recent clean tests, who will get infected AFTER landing on an island with currently no virus visible; and the share of these infected tourists who will be unable/unwilling to pay their medical costs.

The insurance business then becomes a casino when rates are set without reliable data. Ethical insurance companies don’t do that, especially not when the clients have no choice and companies have no competition.

The mandatory daily COVID insurance for tourists, doesn’t take into consideration that tourists who have a house on the island, have insurances that covers COVID treatment, so Aruba will not get stuck with their costs.

Tourists with private additional insurance policies, should not be asked to double dip.

All the rest should be offered the option of COVID coverage, but not mandated.

No doubt, date will be collected in July & August, and the information will emerge what percentage of tourists get sick, despite all entry measures, and what percentage of these require hospitalization, what percentage of hospitalized tourists has no insurance covering medical costs, and what percentage of the latter are deadbeat.

The last figure is likely to be small. That is where analysis comes in. Are these deadbeat cases in a cluster from a particular country? Then you know which country’s citizens not to trust.

At the end this mandatory insurance seems like a lucrative subsidy scheme for local insurance companies. Tourists who get sick will rely on their Aruban COVID insurance even when they have a medical insurance at home that would have covered most of their medical costs here. Most foreign insurance policies have a deductible, so sick tourists will not even mention that they could also use their medical insurance from their home countries. 

In an optimal scenario, there would be 200,000 tourists coming to Aruba the second half of this year. Looking at the reactions to the mandatory insurance scheme on Facebook, about 10 percent of these tourists may cancel their trip. These 20,000 tourists would have stayed on the island an average of ten days, which adds up to 200,000 days. Assuming each would have spent on accommodation, food, entertainment, and other activities US$300 per day, the island loses $60 million. About half of what tourists spend stays on the island, taking into account imported food, beverages, remittances of foreign workers, profit repatriation, etc. So the end result is the loss of $30 million. The gross revenue from COVID insurance is about $20 million, and assuming also that half of this stays on the island, the net loss is $20 million. 

So the island loses $20 million in order to subsidize insurance companies. 


Minister of Health and Tourism on Aruba Visitor Insurance:

Aruba’s special COVID Insurance will cover: isolation and or quarantine accommodation (with max of days), medical costs, testing (except testing at airport).

Aruba’s COVID Insurance is required for all visitors, except Aruban Students and residents from Bonaire and Curacao.

Guests that need to leave a hotel for isolation or quarantine shall be refunded by the hotel for unused nights. 

Arubans that live abroad have same entry requirements as visitors.

Aruba Visitor Insurance pool consists of:

Massy United Insurance 

Boogaard Asurantien 

Ennia Aruba

Elvira Verzekering

Boogaard Assurantien on Visitor Insurance:

Pool formed by local Insurance companies under supervision of local authorities will be responsible for this coverage

COVID Insurances at the moment are limited in coverage. Aruba’s insurance includes more coverage.

MASSY United on Visitor Insurance:

Led the technological aspects for the platform and will lead the pool of brokers.

Insurance can be purchased via the Online Entry Platform on Aruba.com 

Claims handling will be done by Boogaard.

The Insurance policy covers a maximum of $75,000.

Insurance does not cover 24-hour quarantine while visitor awaits test result (if they test after arrival).

Other benefits of the insurance:

Will not exclude coverage for those with preexisting medical conditions

Coverage for max 14 days of isolation

No deductible

Insurance will pay providers directly. No out of pocket expenses for the visitor. 

All medical expenses related to COVID-19 (doctor, medication, transport, hospital, x-rays, lab and nursing).  

Rates (based on length of stay) for age 15-75:  

First 7 days: $15.00 per day

8-14 days: $10.00 per day

15-36 days: $5.00 per day

37-90 days: $2.00 per day 

Over 76 of age has higher daily rates. 

Children 1- 14 will have one-time administration flat fee of US$10 for whole vacation. 

Program will be evaluated after 2 months and adapted if necessary. 



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June 27, 2020
Rona Coster