According to the World Tourism Organization (UNWTO), outbound travel in the Middle East and North Africa (MENA) region is due to increase so rapidly that by the year 2030, the region is anticipated to have around 80 million outbound travellers. In the Middle East alone, UNWTO notes that outbound travel has quadrupled in the last 20 years, making it one of the smallest, yet fastest-growing tourist-generating regions in the world1.
While Covid has shaken the travel industry’s growth (whether short-term or long, we can’t be sure), an increase in outbound travel – however large or small – and especially in a changing travel environment, calls for an expansion in the provision of travel insurance offerings. But what is currently available to the MENA traveller, and how do these individuals tend to engage with travel insurance?
Schengen visa requirements govern the travel insurance market
Jonathan Cooper, Managing Director at Dubai-based Worldwide Insurance Solutions (WIS), tells ITIJ that while there is a direct market for travel insurance in MENA, ‘overall penetration is still very low as the awareness and appreciation of the need for travel insurance products in this region is low, especially compared to other, more mature, insurance markets’.
In the MENA region, says Cooper, the main driver of travel insurance purchasing is the requirement for travel insurance as prescribed by Schengen visa applications. Indeed, a report commissioned by Insight Out, concerning the travel preferences of Middle Eastern travellers specifically2, cited that, in the year 2018, 64 per cent of Middle Eastern travellers had travelled internationally in the previous 12 months, and that a considerable number of these individuals travelling internationally were heading to Europe (27 per cent).
As such, Cooper explains that when it comes to outbound travel, the most popular travel insurance products are often single-trip and those that conform to Schengen visa requirements. “Schengen products likely account for 50 per cent of all products sold,” he said.
But, while the uptake of travel insurance may remain low compared to other geographic regions, the Global Travel Insurance Market Research 2030 report from Goldstein Market Intelligence states that: “Latin America and Middle East & Africa regions are the most lucrative market for travel insurance business in the near future. Declining oil prices improved the travel rates in the region.” Especially in the Middle East, the report notes, increasing travel rates and spending is anticipated to boost the demand for travel insurance3.
Intra-regional vs international travel
Jerome Droesch, CEO Middle East & Africa, Board Member India and Turkey at Cigna International Markets tells ITIJ that, over the last few years,
it has recorded an increase in both inbound and outbound travel in the MENA region
it has recorded an increase in both inbound and outbound travel in the MENA region, both for business and leisure, which, in turn, has increased the demand for travel insurance. And, so, it has responded to the market’s needs with new regional and international plans.
Insight Out’s report also revealed intra-regional travel to be very popular among Middle Eastern travellers, with 39 per cent of those asked having travelled regionally within the previous 12 months. For regional travellers, the MENA region, spanning from Morocco to Iran and down to Sudan, offers diverse cultural and rich historical and religious experiences, not to mention being a thriving hub for business travel, especially the economic powerhouse that is Dubai.
When it comes to business travel, regional policies are very common among small and medium enterprises (SMEs), corporates and individuals who tend to travel regularly, Droesch says. “International policies tend to be more popular between C-suite level executives, who normally spend 80 per cent of their time flying,” the company added.
IPMI products for surging expat numbers
A great number of expatriates are located in the MENA region. The Global Expatriates: Size, Segmentation and Forecast for the Worldwide Market report details that the UAE [as well as the US] followed Saudi Arabia in the rankings for the largest number of expats in the world. The expat population makes up 98.4 per cent of Saudi Arabia's total immigration population. Elsewhere, Qatar had the highest proportion of expats compared to its total population, at 70.9 per cent; and the report also found that Asian countries – specifically those in the Gulf Coast – have been attracting expats at a faster rate in the past few years4.
Droesch explained that international policies were popular among expats in the region. “Usually, such customers require extensive global health coverage to be fully secured,” said a spokesperson.
Cooper at WIS expanded upon this, adding that IPMI policies are popular in many markets where the employer is responsible or legally obliged to provide health cover as part of an employment package. He cites the UAE as a prime example, where both Dubai and Abu Dhabi authorities require a health insurance to be in place as part of the residency and visa issuance process. Where IPMI provision from employers is not mandatory, expats will often opt to purchase it themselves, he says, as medical costs can be very expensive.
A tech-savvy demographic
In terms of how consumers interact with and purchase travel insurance, Cooper explains that while brokers transact a ‘reasonably large’ volume of individual and annual multi-trip travel insurance sales, for the most part travel insurance distribution is dominated by travel agencies. “Airlines and online travel agencies tend to feature travel insurance in the booking path, as you would find in many markets globally,” he said.
Indeed, tech looks to play a major role in shaping the distribution of travel insurance in the MENA region. Cigna's Droesch tells ITIJ that direct online purchases via mobile had started replacing the more traditional mode of consulting a broker to find the best travel insurance options. This follows on from the Middle East Consumer Travel Report 2018 citing that when it comes to booking travel, over half of Middle Eastern travellers (51 per cent) said that they feel empowered by tech.
And perhaps the uptake of tech will, in turn, drive an increased interest in travel insurance? Digital channels present travel insurers with an additional means to reach out to prospective customers after all.
What’s more, Droesch also notes that technology makes access to care, as well as the claims process, faster, more efficient and more transparent: “It benefits both the insurance company and the patient by making the compensation procedure effective, simple and quick. Digitising the claims management process will also help eliminate any human errors and ensure accuracy and safety of all data.” Improved customer assistance can surely only help to encourage new customers and retain existing ones.
Covid-19 spurs insurers to update their offerings
Perhaps, however, it is more pertinent events that will trigger a drastic change to the travel insurance landscape in the MENA region. Certainly, Droesch believes that it is essential to take into account how the current pandemic may shape both travel and health cover in the future.
He tells ITIJ that although it had noted a high demand for regional plans amongst corporates and SMEs in the region prior to the pandemic, the pandemic has transformed the need and demand for international health insurance. “Our insurance sales teams and client managers have observed a hike in demand for access to care and coverage during the pandemic, as part of insurance plans, as people have become more cautious.” Moving forward, Droesch says it expects international plans will become more popular, as people will want access to quality care wherever they are – and high benefits plans, with high coverage for pandemic-related events, will also prove to be popular among consumers.
“What we understand from our studies is that health will be of prime importance and people will evaluate their health cover more carefully in the future,” said Droesch. “We can safely assume that people will be conscious of having peace of mind around their health when they travel, as markets begin to open up again.”
the pandemic may actually help break down some of the barriers to travel insurance uptake
Cooper also agrees that the pandemic may actually help break down some of the barriers to travel insurance uptake in the region. He tells ITIJ that since the global pandemic, many policies now provide cancellation and medical expenses coverage if an insured customer contracts Covid-19. Where there is, at present, generally a low appreciation of consumer products and understanding of need, and where travel insurance is, at times, seen as more of an administrative process to secure a visa rather than a valuable protection product, this mindset could shift, he says. “Potentially, Covid-19 will help start to change this attitude and raise awareness,” he mused. “Already we are seeing positive impacts on conversion.”
Ultimately, while the travel insurance market in the MENA region might seem somewhat immature when compared to its Western counterparts, the opportunities for travel insurance saturation here are enormous. The region boasts a flourishing business centre, the highest number of expats in the world in one of its countries, and the highest concentration of expatriates per population in the world in another (not to mention the projected outbound tourism numbers). Awareness really is the key to driving further growth here, and with growing tech-savvy solutions and the recognition for travel protection that Covid has pushed, it’s ramping up for sure.