Keeping up with customers

ITIJ 212, September 2018
How can travel insurers provide the right level of cover in the face of changing customer habits, asks Charlie Campbell, Senior Policy Adviser, Protection, Health and Travel at the Association of British Insurers (ABI) 
Recently, the new banking app Revolut was in the news for all the wrong reasons. The app – a digital banking alternative that enables its customers to hold, exchange and transfer money without fees – is facing a customer backlash after many were locked out of their accounts as part of the app’s anti-money laundering drive. Interesting; a consequence of a fast-growing technology company, perhaps. But why does this matter for travel insurance? 
Earlier in the month, it was reported that Revolut had joined the small number of Unicorns in the UK – that is, companies valued in excess of $1 billion. This matters because (full disclosure – I am a Revolut customer) a feature of the Revolut offering is on-demand travel insurance. App users can enable the feature, which automatically charges a daily rate for insurance when abroad, with the cost varying based on where you are (and therefore, the cost of medical treatment locally). While the feature appears to just offer medical cover, it isn’t hard to see the appeal: paying for insurance only when you need it and with minimal effort. It is a new way of engaging individuals with the need for insurance and throws down a real challenge to the rest of the insurance market. 
Improving the proposition
Recently, ITIJ covered the news that travellers aged between 18 and 24 are taking risks when travelling abroad, with almost half not regularly travelling with insurance. On the one hand, there is a significant need to increase awareness of the risk of travelling without insurance. New mediums such as banking apps that engage travellers with the need to roam the world with insurance – and provide quick access to it – are certainly positive developments. But on the other hand, there are challenges when it comes to ensuring individuals are getting the right cover for their needs at a time of changing and varying demands from travellers.
Recent ABI stats revealed that the number of travel insurance claims made in 2017 increased by 30,000 year-on-year to 510,000, costing £385 million and amounting to one claim every minute throughout the year. That is the highest amount paid since the Icelandic ash cloud in 2010. Significantly, this was largely driven by a rise in cancellation claims. So, while travel insurance is primarily designed to provide medical cover, it can also provide cover that many will want and benefit from. 
With an evolving regulatory landscape and fast-paced technological change, insurers must continue to adapt to meet customers’ demands of more flexible and personalised product offerings, without compromising on providing the right cover. There are numerous challenges to meet. Government acknowledges the role travel insurance can play in ensuring UK citizens are protected when abroad, and the Airline Insolvency Review has taken an interest in how insurance can help individuals get home if an airline collapses, as Monarch did last year. The FCA is looking at how to help individuals with cancer find cover, but the challenge is to do so without encouraging consumers to place too much emphasis on price alone, which could inadvertently reduce the cover of those currently served by the market.
A fast-paced environment
The world is changing, and the habits and needs of travellers are changing with it. The role insurance plays in protecting travellers has never been more important, but there are numerous questions to answer as insurers adapt to this shifting landscape. To what extent are travellers more at risk when travelling and do they know it? Do changing travel trends demand a change in insurance products? How can insurers work with government and the travel industry to make sure travellers have adequate protection? There are lots of questions and challenges for the industry to discuss, which is why the ABI’s inaugural travel insurance conference – ‘Choosing the right travel companion: travel insurance in a changing world 2018’ – which takes place in central London on 9 October, could not be better timed. 
By the way, I don’t use Revolut’s travel insurance feature. While I rate the monthly spending analysis and foreign exchange feature, I still place more trust in the reliability of established banks and insurers when it comes to looking after my money and providing adequate cover that pays out when I need it. That said, I am in my 30s and work in insurance – maybe not the best barometer for the wider population! ■