Travel insurance confusion
The demand for travel insurance is expected to grow at a sustained rate from 2021. Forecasters expect the market to grow from US $ 12.61 billion over the next four years to US $ 40 billion over the next four years. next seven years.
Despite the growing demand for travel insurance, consumers don’t know what these policies actually cover. In a 2021 survey of 2,800 travel insurance customers, a UK-based consumer group discovered a large gap between what customers thought they were covered and likely reality. For example, about half of those polled in the survey said they would be covered for a cancellation in the event of another foreclosure, when in fact most policies do not cover losses resulting from alerts. and warnings issued by government entities. This confusion is consistent with Simon-Kucher research, which shows that most clients (75%) have difficulty understanding commonly used insurance terms and definitions.
Insurers and intermediaries must redouble their efforts to combat the confusion and misconceptions about travel insurance coverage. Prominent statements clearly stating that âfear of travel is not a covered riskâ or âtrip cancellations in response to government blockages or travel warnings are not covered risksâ can go a long way . FAQs dealing with the most confusing areas can also be an effective solution.
Above all, travel insurers must exceed the minimum readability standards set by regulators. By clearly defining what they intend to cover and not, insurers can avoid costly legal disputes and damage to reputation. No one wants a repeat of 2020 when customers flooded travel insurance companies with complaints after insurers dismissed claims for Covid-19-related losses. Some of those complaints have turned into costly lawsuits that find their way into the US legal system. The rejection of claims also creates reputational risks that hamper the production of new businesses. Customer confidence is an essential element in the decision to purchase insurance. If customers are not convinced that an insurer will meet its obligations in the event of a loss, they will do business elsewhere.
The pandemic has forever reshaped the travel industry. Not only have the risks associated with international travel changed, but new types of travelers and customer segments are emerging.
For example, 54% of those polled in the American Express 2021 Global Travel Trends Report said the freedom and flexibility to be able to live and work while traveling the world is more appealing after the pandemic. For these digital nomads, traditional travel insurance policies – which are short-lived and rarely renewed – may not meet their needs. These local self-employed workers, who use technology to do their jobs and wish to work remotely from foreign countries, need travel insurance coverage for longer terms with the option to renew. So too are senior nomads, another emerging class of travelers, many of whom have continued to travel amid the pandemic.
We can expect an increased demand from travel providers, eager to win back customers. Insurers will also see an increase in policies sold through travel agents and travel counselors, as travelers turn to professionals to help them navigate the complex and ever-changing global travel landscape.
Insurers need to stay tuned and leverage data-driven intelligence to understand changing global travel behaviors and motivations. They must be prepared to pivot quickly with improved product offerings and new distribution strategies to better serve customers, business buyers and partners.
Emerging travel risks
Insurers should also be aware that the pandemic has resulted in economic turmoil, widespread unemployment and social disruption. These are breeding grounds for crime.
In an April 2021 report, the European Union notes an increase in organized crime, including mobile groups focused on activities such as thefts, break-ins, pick-pocketing, ATM attacks and theft valuable items. Crime has also increased in the United States; Big cities like San Francisco, New York and Chicago are all reporting an increase in crime as pandemic restrictions are lifted and tourism resumes.
Travel insurers must begin to develop the ability to better understand their responsibilities in order to accurately price travel-related policies. This includes the use of machine learning, big data and real-time intelligence to incorporate more data elements on the individual’s destination, journey, crime rates and risk profile.