Travel insurers and travel agents

ITIJ 214, November 2018
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We are in a technology-driven era and nothing stays the same for very long, especially as far as business practices are concerned. So, it should not be surprising that the relationship between travel insurers and the travel industry, particularly travel agents, has changed dramatically over the last two decades, as Anthony Harrington explores.

The major driver of change, of course, has been the internet and the channels it has opened up for a direct relationship between consumers and travel insurers, often via price comparison websites. Julie Remmington, a UK-based consultant with many years in the business, points out that whereas in the 1990s around 80 per cent or more of travel insurance would have been sold to customers by travel agents, today the figure is down to around 30 per cent. 
In the ‘90s, then, the volume of business being put the insurers’ way by travel agents provided a very considerable incentive for the industry to engage closely with the travel sector. The aim then was to ensure that travel agents had at least a working knowledge of the various travel insurance policies and options and understood the importance of explaining things like exclusion clauses for ongoing medical conditions to the consumer. 
 
From the travel agent’s perspective, the commission they would get from selling a travel insurance product is far too small to warrant them spending much time on it
 
However, as Remmington notes, today, with so much travel insurance being bought over the web by consumers, and with travel agents so often not in the picture at all, there is considerably less incentive for travel insurers to put a great deal of time and effort into building bridges with the travel sector. Circumstances now tend to push the industry towards focusing much more effort on educating consumers directly.
 
Booking travel onlineRules, regulations and small print
Moreover, it is not just the web that is standing as an obstacle in the way of a tight relationship between the travel industry and travel insurers. The last two decades have seen a considerable tightening in the rules, specificially in the UK, regarding who can give financial advice to consumers. As Remmington notes, travel insurance is a non-advised sale. This means that third parties, such as travel agents, can only sell the policy that they are affiliated with. 
“Thomas Cook, for example, only sells White Horse travel insurance, since that is its own insurance,” she explained. “What travel agents cannot do is to look over the universe of travel insurance policies and advise consumers in detail as to the travel insurance product that best suits their needs. That would take them into the realm of providing financial advice. They can only talk very generally.”
Remmington points out, too, that one of the problems with travel insurance is that it is actually a very complex product that is bought very rapidly. From the travel agent’s perspective, the commission they would get from selling a travel insurance product is far too small to warrant them spending much time on it. 
The travel agent’s main driver, then, as far as selling travel insurance is concerned, comes down to them wanting to provide a great service to the consumer – which, of course, is part of the agency building its own brand. 
Where agents are charging some level of premium pricing to preselect and provide the best array of travel insurance products for their clients, that additional level of pricing will tend to make whatever they are offering uncompetitive by comparison with a direct buy by a consumer from a travel insurance price comparison site or the insurer’s direct site. 
 
Co-operation is key
Having said all this, it is still very much in the travel industry’s interests to work with travel insurers wherever possible, so that whatever is sold through them is sold correctly. “One of the things I see all the time, and there are new cases almost every week, is travel insurers either rejecting a claim or looking to the agency to provide compensation where they have not passed on relevant information to the insurer,” Remmington told ITIJ.
A frequent cause of concern, she points out, is where the consumer who is buying both a package holiday from the travel agent, and travel insurance, has told the travel agency that they have a pre-existing serious medical condition, but the agency has not filled in the form correctly and has not passed that information on to the insurer.
 
when travel agents become educated about the benefits of travel insurance and assistance, they become an even stronger resource for their valued clients
 
Sales of travel insurance products sold through travel agents might be down to 30 per cent in the UK, but that is still almost a third of all sales, which provides plenty of scope for things to go wrong. The emergency evacuation and massive medical cover contingency provisions in travel insurance provide plenty of opportunities for things to go wrong in the three-party loop that consists of the consumer, the travel agent and the travel insurer. 
This is not good for any of the parties involved. It can end up with the insurer paying out a very large sum to the consumer who has had a bad medical emergency abroad, and then looking to the travel agency for recompense for not passing on relevant information. It can also lead to the travel agent selling a policy that is a mismatch with the consumer’s package holiday. 
“If part of that package deal involves the opportunity to go scuba diving and the travel insurance excludes scuba diving, that can lead to real difficulties,” said Remmington. If the consumer has bought both the package holiday and the travel insurance from the travel agent, that is an issue.
 
Ball in their court
One way round this, as noted by Daniel Durazo, Communications Director at Allianz Partners US, is for the travel agent to sell Allianz’s travel insurance products, but to direct questions about those products back to Allianz: “This not only allows travel agents to steer clear of regulatory issues. It also provides their customers with the best possible resource for answering questions about how travel insurance and assistance can help in specific situations.”
One refinement on this process is for the travel agency to make use of Allianz’s AgentMax travel agent portal, which looks to suggest the best travel insurance product for each customer, based on the specifics of their trip and their personal circumstances. 
“By entering the traveller’s details into AgentMax, travel agents will be provided with the coverage and benefits that best match the details of their customer’s itinerary,” Durazo told ITIJ
He then pointed out that regardless of declining travel insurance sales through the travel trade, Allianz regards the relationship with travel agents as crucial: “We think it is very important that our distribution partners understand the benefits of travel insurance and assistance. That’s why we sponsor an educational programme on the Travel Agent Academy that includes an informative and modular series that can be easily reviewed in short chunks. The series explains the benefits of travel insurance and provides information on our products and services. We believe that when travel agents become educated about the benefits of travel insurance and assistance, they become an even stronger resource for their valued clients. We also produce a blog and newsletter called AgentSmart that provides travel agents with important information on the benefits of travel insurance.”
 
A female travel professionalSupport structure 
In addition to their own individual efforts to extend the know-how of travel agents, travel insurers also look to their industry bodies to work both with travel specialist bodies around the world and with travel agencies. There are a number of initiatives ongoing at this level. Durazo points out that Allianz USA works closely with the American Society of Travel Advisors and other trade associations on a variety of issues that are of mutual interest to both the travel sector and travel insurers. 
“What we look to do is to align our communications with theirs,” he told ITIJ. “We sponsor and attend their events to develop important, mutually beneficial relationships and to help shape regulations that may impact our respective industries. We also support organisations like Tourism Cares, which is the charitable arm of the tourism industry that organises service events that help the communities that welcome tourists.”
 
compliance regimes distinguish between those qualified to give detailed advice and those who can simply point, as it were, to a spread of travel insurance products, and advise customers to look to the insurance providers for detailed advice if they feel inclined to dig deeper
 
Megan Cruz, Executive Director at the US Travel Insurance Association, commented: “While acknowledging that most advisors are not insurance agents, it remains critically important that travel advisors understand how they can assist their clients in learning more about helping to protect their travel investment.”  
She points out that it is simply best practice for travel agents to maintain a working understanding of the various types of travel insurance coverage and the differences between third-party insurance and supplier insurance.  
“That said, it is a bit of a fine line to walk, and travel advisors should not hold themselves out as insurance experts unless they are a licensed insurance agent. It’s okay to pass along general information on travel insurance and understand the basics as a travel retailer, but detailed questions should always be handled by the licensed insurance provider,” she noted. 
Which brings us back to the basic problem: namely, that compliance regimes distinguish between those qualified to give detailed advice and those who can simply point, as it were, to a spread of travel insurance products, and advise customers to look to the insurance providers for detailed advice if they feel inclined to dig deeper. Given the complexity of travel insurance products, with the inevitable exclusion clauses, and the huge sums that could potentially be involved, there are plenty of cracks in this approach for both travel agents and consumers to drop through. 
This is perhaps the main reason why the Association of British Insurers (ABI), while it maintains a relationship with ABTA and supports its members in liaising with the travel trade, tends to focus its efforts on educating consumers directly about the complexities of travel insurance. Instead, as Sarah Cordey, Manager, Communications and Campaigns at the ABI, explained, the Association focuses its efforts on educating consumers directly about the complexities of travel insurance. 
“We collaborate very fully with our travel insurance provider members to address the public directly with the most effective campaigns we can come up with,” she told ITIJ. “You have to remember that the days where the vast majority of people bought package holidays from travel agents are long gone.”  
Today, the majority of holidays have either all or most of their elements booked direct by the customer. Even when people go to travel agents to book some aspect of their holiday, they will generally book additional elements of the holiday online from a variety of sources. 
As part of this direct-to-the-consumer approach, the ABI’s latest campaign on its website features a series of animations illustrating various aspects of travel insurance. “In my view, there is a very good level of awareness between the travel industry and the insurance sector,” said Cordey, “but there is no complacency. Travel policies tend to be bought by consumers on price alone and that is very unfortunate.
“Our campaigns try to educate people directly on the importance of having a good level of medical cover as part of the insurance and ensuring that there is medical evacuation cover to get you back home if necessary. There are huge, life-altering sums potentially involved and in travel insurance, like anything else, you get what you pay for.”