High-impact events lead to increase in demand
Extreme weather events, disease outbreaks and socio-political volatility are the top emerging risks for local travellers over the next 12 months, according to AIG Singapore
Claims data from AIG Singapore reveals that high-impact incidents such as those noted above are becoming more common than they were three years ago. Since 2014, AIG Singapore has noted an 85-per-cent increase in travel claims made for such incidents, with natural disasters being the costliest with an average claim amount of S$2,610. The insurer has predicted that these trends will continue throughout 2017, resulting in a 10-per-cent rise in demand for premium travel products offering a greater amount of cover.
AIG Singapore vice-president and head of group personal insurance Ignatius Chng commented: “As Singaporeans continue to be savvy and frequent travellers, their global mobility and increased awareness of travel insurance will see them taking a proactive approach and insuring themselves against unforeseen circumstances.” Chng went on to say that with natural disasters on the rise due to the onset of global warming, as well as more rapid disease outbreaks, such as the Zika virus epidemic in 2016, such issues have detrimental effects on travellers – from delayed flights and high medical expenses, to travellers finding themselves stranded thousands of miles away from home, so making travel insurance a worthy investment.
Meanwhile, AIG Singapore noted that socio-political volatility is also an emerging risk, with claims data suggesting that travel insurance claims relating to socio-political volatility have more than doubled in the last three years, where people had their travel disrupted as a result of political instability, coup d'état, increased border security, and terrorist attacks. Chng said that such risks mean that the extent to which travel insurance needs to meet customers’ demands is increasing: “Singapore travellers are demanding greater levels of coverage and looking for travel insurance that suits their needs, especially since the global security environment has become increasingly volatile in recent years and high-impact incidents are more prevalent.”
Whether it is extreme weather events, disease outbreaks or political unrest, Chng said that it is important for insurers to adopt a seamless claims process supporting their customers wherever they are in the world: “These situations can be highly stressful, and consumers are looking to mitigate risks in potentially bad situations. This is why they are no longer focused on the latest deals when it comes to travel insurance. Instead, their priority is what will provide the most comprehensive coverage along with a customer-centric approach, so as to have peace of mind when travelling.”
To meet this growing demand for a more seamless claims and risk management process, AIG Singapore expects travel insurance providers to transform their offerings by expanding their digital capabilities: “We have seen an increase in customers making direct purchases digitally, but technology does not stop at distribution. The next step would be for them to embrace disruption and move more service offerings towards the digital.”
Looking at how digital sales channels have already improved the travel insurance take-up rate, NTUC Income head of personal lines Annie Chua said the insurer has seen an increasing trend of Singaporeans buying travel insurance, and that it can be attributed to ‘the process of buying travel insurance becoming increasingly convenient for consumers through various platforms such as the web and mobile phones ... coupled with the lowering of travel insurance costs’.
Awareness of the benefits travel insurance offers holders is increasing in Singapore, according to industry experts, who attribute rising sales to people understanding what insurance offers. Shirley Tan, the local marketing head of Etiqa Insurance, the insurance arm of Maybank, noted: “There is an increasing awareness that travel disruptions and events such as natural disasters, epidemics or terrorist attacks can happen anytime and anywhere.” And with increasing awareness of the product will then come a deeper understanding of the variations between policies, said Himanshu Upadhyay, assistant vice-president at Ergo Insurance Singapore, who pointed out: “With that awareness comes the understanding that the cheapest products often do not provide all the coverage you are expecting.”