Can tech educate consumers?

ITIJ 210, July 2018

The travel insurance industry can utilise tech to improve consumer knowledge and drive take up, writes Mark Colonnese, Director of Aquarium Software

The travel insurance industry, rightly or wrongly, has a reputation. On one hand, the sector is accused of being slow to deliver change to traditional practices, and on the other hand, for being rejected by younger generations. Understandably, there has always been suspicion that the two are linked – unable to embrace the demands of ‘Generation Backpack’, yet the sector paradoxically prices some older travellers with pre-existing medical conditions out of the market.
Travel technology specialists are working towards bringing the sector into the modern world, with the twin aims of improving the customer journey and increasing travel insurance take up across all demographics. YouGov research commissioned by Aquarium Software demonstrates that take up is low across all age groups, and that 55 per cent have no cover at all, with a further five per cent unaware if they were insured or not. Millennials remain a concern group, with 62 per cent of 18-24 year-olds having no cover, ‘beaten’ only by the 25-34 year-old bracket, where 63 per cent admitted to having no travel insurance.
The survey shows that travel insurance is viewed as a ‘necessary evil’ by 29 per cent of 18-24 year-olds, and this view seems to solidify with age, peaking at 54 per cent among over-55s. Factor in the 69 per cent who have never made a claim, rising to four-fifths of 25-34 year-olds, and the industry must demonstrate value. While we underestimate these findings at our peril, technology is already positively changing the dynamic between insurer and insured.
Analysing behaviours
The average consumer looks at multiple websites and increasing numbers buy online. The rise of the silver surfers, smartphones and Amazon has led to a revolution in buying habits and insurance is not immune. The last decade has seen a marked shift in the way travel insurance is purchased, and the days of the travel agent on the high street are numbered. Price comparison websites (PCWs) now have 30 per cent of the market, and while over-55s continue to buy direct from travel service providers (41 per cent), it is telling that 37 per cent of millennials opt for PCWs. Packaged bank account insurance makes up 22 per cent of the market, which, with PCW, now accounts for 46 per cent of all travel premiums purchased.
travel insurance is viewed as a ‘necessary evil’ by 29 per cent of 18-24 year-olds
Traditional trips have given way to more bespoke travel arrangements, and insurance has struggled to keep up. Acceptance that one-size-fits-all policies are no longer viable has led to add-ons to traditional cover, which have received a mixed response. They are not bad, per se, but can leave travellers sacrificing value for convenience. Bite-size policy pieces are easy for travellers to swallow, but traditional systems are not designed with these add-ons in mind. Intuitive apps deliver the flexibility bespoke holidays demand. They not only drive better customer engagement, but even more importantly, permit the consumer to tune their cover while they are on holiday.
Technological opportunities
The advantage of technology for the industry and the consumer is hard to exaggerate. As holidays evolve, insurance must innovate: geo location-based tracking allows us to add bolt-on services to automated claims monitoring and handling. The young find this ‘pay as you go’ approach appealing, and geo location means the consumer can be proposed relevant add-ons and upgrades as their location changes, the classic example being the proposal of winter sports cover when the time and location suggest that this could be useful.
Mobile apps are already being used to perform medical assessments before travel. As one of the biggest concerns is falling ill abroad, smart services enable insurers to advise on treatment and can arrange for reps on the ground to deal with hospital negotiations, reducing the risk that you will not be covered. Software allows insurers to advise, recommend and assist policyholders based on circumstances. Technology puts vital information at our fingertips in ways unimaginable 10 years ago. The insurer can check travellers have the necessary medication, advise on further cover and even provide the latest Foreign & Commonwealth Office advice.
Technology puts vital information at our fingertips in ways unimaginable 10 years ago
Insurers can deliver a more comprehensive service, add value and upsell based on genuine need. Policies travel with the traveller, allowing insurers to authenticate claims quickly, thus acting as a powerful anti-fraud tool, while consumers benefit from simplified small print, lower premiums and instant help at their fingertips.
Policyholders have the power to customise to suit individual needs, and when deployed intelligently, technology saves everyone money in the long run. The UK is ahead of the curve in these innovations, and with four out of five UK adults owning a smartphone and 56 per cent wanting to see better websites and mobile apps, the sky is the limit when considering what technology can now deliver to the travel insurance sector.