Geopolitical volatility puts ‘Cancel For Any Reason’ product in the underwriting spotlight

A combination of the drawn-out US government shutdown and conflict in the Middle East has disrupted travel plans worldwide, prompting a noticeable shift in how trips are insured. 

According to Squaremouth, interest in cancel for any reason (CFAR) coverage has risen by roughly 27% since the start of March, with the firm linking the uptick to recent geopolitical and operational uncertainty. This trend is sharpening the focus on how flexible cancelation benefits are priced, structured and distributed.

How CFAR works from an insurance standpoint

CFAR demand is rising against the backdrop of a growing insurance market and higher average trip values. As more carriers raise CFAR reimbursement caps from around 60% to as much as 75% of trip costs, uptake of the benefit has increased, reflecting a stronger preference among travelers for flexibility over the lowest possible premium.

Despite the name, CFAR is not a standalone product but an optional upgrade to a comprehensive travel insurance plan. 

Under most policies, CFAR will reimburse between 50% and 75% of prepaid, nonrefundable trip costs if a traveler cancels for a reason not covered by their base policy. To trigger the benefit, insureds are generally required to insure 100% of their nonrefundable trip costs under the policy, purchase CFAR within a defined window (often 14 to 21 days) of their initial trip deposit, and cancel at least 48 to 72 hours before departure. 

“Travel insurance policies with the CFAR upgrade provide the most flexibility to cancel your trip,” said Chrissy Valdez, senior director of operations at Squaremouth. “This upgrade typically increases a policy’s cost by about 40% to 50%, but we’ve already seen how valuable that added flexibility can be for travelers affected by major events in 2026.”

Where standard coverage stops – and CFAR starts

CFAR is most relevant in the gray areas that standard trip cancelation either excludes or treats narrowly.

Examples include deteriorating but not officially banned conditions at a destination, rolling airspace or route suspensions that do not meet strict policy definitions, or situations considered “known and foreseeable” before purchase. Those circumstances typically sit outside traditional policy language, especially once an event is widely publicized.

CFAR can also respond when travelers cancel due to voluntary job changes or scheduling conflicts, a decision not to travel after non-qualifying medical advice, concerns about visiting destinations under heightened State Department advisories, or new financial constraints that arise after booking.

In all of these cases, standard cancelation wording usually offers little or no recourse, which is why brokers increasingly position CFAR as a true add-on rather than an overlapping benefit.

Pricing and product design implications

On the insurer side, the surge in CFAR interest raises several issues. 

CFAR introduces more behavior-driven risk. Unlike traditional cancelation triggers, which are often objective and documentable, CFAR decisions may be influenced by subjective risk perception, media coverage, or changing personal preferences. That can increase utilization during periods of geopolitical stress or prolonged operational disruption, such as the current shutdown and Middle East conflict.

Another is that because CFAR only reimburses a percentage of trip costs and is subject to strict timing rules, average claim severity tends to be lower than for full cancelation claims. That dynamic, combined with the additional premium CFAR generates, has so far made the benefit manageable for many carriers but it requires careful monitoring of take-up rates and claim frequencies as external conditions shift.

In response, many insurers have tightened eligibility windows, capped reimbursement at 50 to 75%, and enforced full-trip-cost insurance requirements. Some are also segmenting CFAR pricing by destination or trip type, reflecting different risk profiles for, say, cruises, long-haul itineraries, or politically sensitive regions.

The 2026 experience will likely feed into next year’s product and pricing reviews. If CFAR demand and utilization remain elevated, underwriters may further refine eligibility criteria, adjust reimbursement percentages or consider alternative constructs such as “interruption for any reason” for in-trip disruptions.