ITIJ 214, November 2018
Canadian travellers are disregarding the troublesome issue of politics and heading south, boosting the take up of travel insurance. Milan Korcok reports on this and more trends in the marketplace
Despite a particularly rough year for Canadian-American relations, fueled by disputes over tariffs and trade and stoked by overt distrust between the nations’ leaders (Prime Minister Trudeau and President Trump), Canadian travellers have sidelined their threats of US travel boycotts until after they take their vacations south of the border.
That’s great news not only for US tourism (which benefits from Canadian largesse to the tune of US$20 billion a year) but for Canada’s travel insurance industry, which the Conference Board of Canada (CBoC) has valued at around CA$860 million, and for Canadian travellers, who make 25 million trips south of the border yearly.
From strength to strength
According to official government statistics, in the first five months of 2018, Canadians made 18.1 million trips to the US, 11.5 per cent more than in the comparable period of 2017, reversing a three-year downward trend (partially attributable to an exchange rate dip during which the Canadian dollar dropped in value to 69 US cents in 2016 before crawling back to 77 cents this year). These numbers encompass only travellers who spent at least one night in the US per trip, and don’t include the millions of same-day trips across the border for shopping, sports events, golf, and birthday visits with relatives.
Will McAleer, past President of the Travel Health Insurance Association of Canada (THIA) and President of World Travel Protection (WTP) Canada, commented on the figures: “It’s great to see continued strength in travel to the US by Canadians. With short flights to sunny destinations, the US is often the most cost-effective getaway to the beach. When you factor in the ability to take a road trip to southern destinations or even a discounted flight from an airport across the border in the US, the options available continue to make US destinations incredibly attractive for Canadians. And this goes for snowbirds and family groups alike.”
The upswing also reflects a stubborn reluctance by Canadians to suppress their travel habits for anything ideological or political, especially during the unforgiving winter months. And, happily for travel insurers, this determination to keep hitting the road also reflects a growing acceptance of private travel insurance in the everyday lives of Canada’s travellers of all ages, even increasingly among the younger ‘invincibles’.
According to the results of a survey issued in June 2018 by the Canadian Association of Financial Institutions in Insurance (CAFII) – a not-for-profit association of banks and financial houses with interests in insurance products – eight out of 10 Canadians who have purchased travel medical insurance said they were satisfied with the products they purchased and value those products provided; 98 per cent who made loss claims in the previous year said they were fully or partially paid (only two per cent of claims were rejected), and 91 per cent of claimants were satisfied with their claim experience ‘from initial contact to final outcome’.
Growing confidence, expanding sales
According to a recent poll commissioned by the Conference Board of Canada, 78 per cent of Canadians who travelled internationally on their last trip said they were covered by some form of travel insurance – with a whopping 93.4 per cent of the oldest cohort of travellers (aged 65 and older) claiming such coverage.
Moreover, confirming that the value of insurance was penetrating younger age groups previously considered a somewhat tougher sell, 25 to 34-year-old travellers claimed a 66.7 per cent travel insurance coverage rate. As could be expected, the 55 to 64-year-old age group tallied up an 84.5 per cent coverage rate.
Of individual annual multi-trip or single trip product sales (as opposed to group policies such as employer or retiree pension plans) the greatest number (37.8 per cent) were obtained directly from travel insurance companies or brokers, 16.1 per cent from travel agents, 19.4 per cent from membership associations, and 18.4 per cent from financial institutions such as a banks or credit unions.
As for how these purchases were made, 34.8 per cent of survey respondents said they purchased their policies online during the 2018 survey period, a significant increase compared to the 27.6 per cent who did so in a similar survey done in 2016. Just over 29 per cent of respondents said they purchased their insurance in person, while 29.8 chose to make their purchase over the telephone.
The CBoC survey also showed that travellers were incorporating their insurance purchases into the earlier stages of their travel plans: almost 55 per cent bought their policies at least four weeks before their planned trip departure, 29 per cent bought between one and three weeks prior to travel and only 16.1 per cent waited until within one week of their trip to buy travel insurance.
Claims experience rebuts media perceptions
In Canada, media criticism of travel insurance has usually focused on isolated cases of claim denials reported by disappointed travellers insisting they didn’t understand confusing language on their applications for coverage, or they just made minuscule mistakes in reporting their medical histories when applying, or were never told by their doctors they had atrial fibrillation or first degree heart block, or that the selling agent never explained the limitations in their policies.
But the CAFII report showed that, in fact, Canadians are becoming more conversant with what their travel policies are designed to do, and it showed that they believe they have a reasonable understanding of the terms of coverage of the products they are buying. In fact, 89 per cent said their knowledge of the terms and conditions was reasonable and they felt they had at least some knowledge of the limitations and exclusions when purchasing their coverage.
Furthermore, 85 per cent of those who lodged claims felt they had been sufficiently well informed about how to do it, and 89 per cent thought the claim submission experience was positive – either meeting their expectations (75 per cent) or exceeding them (14 per cent). Only 31 per cent had complaints about their claim experience, and that was down from 38 per cent in a similar survey done in 2015. The major complaint they expressed was the long time it took to process a claim and the lack of clarity about what was required in launching their claim.
The prime factors in making travel insurance choices
According to the CAFII report, 87 per cent of respondents were most influenced by the features and benefits; 85 per cent by the overall amount of coverage ($2 million/$5 million/$10 million); 83 per cent by their ability to speak to someone about the purchase; 81 per cent by the price of the product; 77 per cent by the ease of the purchase; and 71 per cent by the product’s capacity to cover pre-existing conditions.
In summarising CAFII’s findings, Keith Martin, Co-Executive Director of CAFII, said that although consumers continue to raise the bar on what they expect from their policies and the service they receive from travel insurers, overwhelmingly, the perception of the industry is positive: “Canadian consumers have expressed a great deal of confidence in the travel medical [insurance] industry, and the products that our members provide.”
Travel is in Canada’s bloodline
Canadian outbound travel is extremely diversified. As the CBoC shows, Canadians made more than 745,000 trips to 25 European countries in the first quarter of 2018, a 9.8-per-cent increase over the same period last year. Furthermore, they made more than one million visits to key destinations in the Asia/Pacific region throughout the first quarter of 2018, a seven-per-cent increase compared to last year. Taiwan, Sri Lanka, and Singapore saw the largest proportional increases in arrivals and China welcomed an estimated 193,000 visitors, 19.1 per cent of the region’s Canadian market.
However, the US market remains the bedrock of Canada’s travel industry, and thus it has always attracted the greatest attention of travel insurers. Consequently, any talk of travel embargoes or boycotts to the US – as has surfaced and re-surfaced in the Canadian media in recent months – should be expected to raise concern among travel insurers … except for one rock hard truth about their travel-hungry customers: Who’s going to stop them?
Love the weather, not the politics
Veteran observers of Canadian leisure travel habits insist that it will take more than occasionally slumping currency values, rising gasoline prices, or the exigencies of US politics to keep long- or short-term snowbirds home when the season’s first low pressure systems come swooping down from Siberia. Not even the anti-Trump media barrages – even more vociferous in Canada than the US – and the sporadic threats of southbound travel boycotts, have been able to deflect that reality.
As McAleer noted, the US still represents ‘a familiar and safe travel destination’. He added: “With reports of safety and security issues in some Caribbean countries, many Canadians may opt for destinations that seem safer and more dependable. That said, the new reality is that safety risks come in many different forms and can be experienced wherever someone travels.”
Canadians also value familiarity, even when it rankles. One Associated Press news report, published at the height of the Trudeau-Trump tiff over tariffs and the never-ending NAFTA negotiations this past summer, showed thousands of mostly French-speaking Quebeckers cavorting at Old Orchard Beach in Maine, where Canadians account for 95 per cent of hotel/motel bookings.
For them and their hosts it was business as usual. Said one non-plussed Montrealer about the odd-couple fracas attracting all attention: “For me, it’s just a question of time … this thing will settle down. Trudeau and Trump have to find a solution to the problem.”
Said another Quebecker, the war of words is between leaders. “Regular folks,” she said, will get along. “We are friends. We are neighbours.”
As for those who favour boycotts, it’s just a matter of reconciling attitudes and actions, which some are doing quite creatively. One disgruntled western Canadian interviewee told the CBC why he decided he could go ahead with his vacation to Hawaii without having to sacrifice his principles: “Hawaii has been one of the most anti Trump states … and they rely on tourism so much that if all the anti-Trump people – which I am certainly one of – stopped going there, that would kill their economy.” So he’s going.
With such admirable self-sacrifice in play, how can southbound tourism be anything but secure? ■