Digital nomads and insurance needs
Alysia Cameron Davies discusses the needs of digital nomads from an international health insurance cover perspective, and shares insights from experts about how they have responded to customer demands
Advances in technology have made working remotely easy and accessible. Now that more companies are offering home-based positions following the pandemic, will the digital nomad lifestyle become more popular?
There are currently 38 countries giving out visas to digital nomads, provided they meet the financial requirements and take out appropriate insurance. Most visas are valid for a year with the possibility of an extension to two years; Indonesia even gives the opportunity for a five-year extension. From Costa Rica to Norway, Australia to Iceland, there are many possibilities for those looking to travel whilst keeping their jobs.
A full list of countries offering such visas are Anguilla, Antigua & Barbuda, Australia, Bahamas, Barbados, Bermuda, Cape Verde, Cayman Islands, Colombia, Costa Rica, Croatia, Curaçao, Czech Republic, Dominica, Dubai, Estonia, Georgia, Germany, Greece, Iceland, Indonesia, Italy, Malta, Mexico, Mauritius, Portugal, Romania, Seychelles, Spain, Svalbard Islands, Norway, Thailand and certain states in the US.
Answering emails from a tropical beach does seem appealing, but what happens if you break a leg while you’re rushing inside from tropical paradise to answer a Zoom call from a client? Where do digital nomads stand in terms of medical insurance? Are there difficulties with finding the right cover to match visa requirements and health needs, and how can insurers make sure policies are flexible and adaptable so that the client, who is changing location often, can receive appropriate care in multiple countries under the same policy? ITIJ spoke to a number of insurers that provide policies for digital nomads and asked about their experience.
Demographics and uptake across the different categories
Andrew Jernigan, CEO of Insured Nomads, pointed out that the demographic of these long-term expats is changing, and with this shift, the needs of the client’s insurance become realigned. “It is a client that often does not have a home address but is high net worth,” he told ITIJ. “Gone is the day of backpacking and hosteling nomads, but it’s a remote worker that earns a high income and expects differentiated service compared to the short-term holiday traveller. Sadly, travel insurance has been marketed to them when they are in an extended lifestyle that calls for a cross-border health insurance plan rather than a travel medical plan. One of the challenges is that often, they are not aware that pre-existing conditions are often excluded in these plans.”
Jernigan said such policies have become increasingly popular amongst Americans, with remote working allowing employees to leave the office behind. Insured Nomads has also seen higher uptake amongst the 50 to 65-year-old age category, with more people retiring early or relocating and working from their dream destination.
Tim Riley, MD at True Traveller agreed that ‘the spread of age ranges has increased’.
“Backpackers are no longer 20 somethings, and nor is it mandatory to own a backpack! There’s a demand now, which existed before the pandemic, for people in their 40s, 50s and 60s to go off for a year or more,” he said.
Riley predicts increased uptake could be seen for policies in Australia, following rule changes that come into place in July allowing UK citizens up to 35 years old to take out a three-year working holiday visa.
Catalan also recognised Americans as a top customer “The US accounts for a significant portion of the global nomad community, possibly one of the trendsetters in terms of remote working in general.”
However, he said customers tend to be from the younger age categories. “Digital nomads tend to be younger, and the majority are in their 20s and 30s. For those aged 45 and over, the trend drops off whereby changes in lifestyle are different and they tend to stay longer in a particular location rather than travelling every few weeks.”
Melton said IMG had also seen more uptake amongst younger customers: “Regarding specific age groups, it is most commonly a younger demographic purchasing our international private medical insurance plans. Utilising technology in order to remotely work and make their income from anywhere in the world, we expect this trend of younger insureds to continue.”
He highlighted the US, Mexico, and France as the most common primary destinations or residences selected as of late.
Challenges of providing insurance for Digital Nomads
Kevin Melton, Global Head of IPMI for IMG, explained: “Pinpointing where to call ‘home’ for these travellers can prove to be difficult and, as a result, the implication for insurers is that we must be flexible about covering our members who identify as digital nomads to move between different country locations while maintaining coverage, which is not necessarily easy from a regulatory point of view.
“The process of creating long-term policies differs from that of short-term trips – there are additional underwriting requirements necessary for serving the digital nomad demographic because of the annually renewable feature that is included with the type of insurance policy they want,” he said.
David Le, General Manager, Underwriter & Strategy at World Nomads, told ITIJ that creating policies for digital nomads is about protecting the lifestyle. “Digital nomads are often technically adept and embrace the latest innovations, which means that they’ll want to be insured for their fancy gadgets as well as the rest of their personal belongings. Many insurers won’t want to cover high-priced electronics,” he said. “Digital nomads will also want emergency medical coverage, including repatriation, for any major incidents that could happen when they’re away from home. The key is to offer policies that keep up with digital nomads’ evolving needs and the changing nature of the pandemic. Insurers can do this by ensuring flexibility in coverage and for some countries of residence, whose policies hinge on travel advisories, catering to the constantly updated government travel requirements.”
The process of creating long-term policies differs from that of short-term trips – there are additional underwriting requirements necessary for serving the digital nomad demographic because of the annually renewable feature that is included with the type of insurance policy they want
Flexibility is key to developing a digital nomads insurance programme, said Leor Catalan, CEO of PassportCard Nomads: “Nomads are a mid-point between travellers and expats, but neither of the two. This, along with other lifestyle factors, changes the profile of their insurance needs, such as for medical cover, protection of personal possessions, work habits, etc.,” he told ITIJ. “Insurers are used to calculating risk over very fixed types of situations. Situations that are constantly changing are very difficult to predict and calculate. Coming up with and providing insurance products that are specifically tailored to the needs of digital nomads requires flexibility and agility.”
With increased home working, is this product becoming more popular?
“The pandemic has increased the nomad trend quite significantly, by hundreds of per cent. The numbers are literally extraordinary,” said Catalan. “Crucially, it must be digital from end to end and super flexible. In general, being very tech savvy and focused on living their life without any strings attached, nomads are looking for products that match their lifestyle and view of the world.”
Le agreed: “As employees now have more flexible work options because of the pandemic, the demand for travel insurance for digital nomads has increased. Though travel is not at the same level as it was before Covid-19, going forward, we expect the people who do chose to travel to be travelling for longer periods of time and taking advantage of those flexible work options by taking trips that combine work and leisure,” he said.
IMG has seen an increasing number of digital nomads purchasing long-term, annually renewable insurance policies. “We expect this trend to not only continue but to increase as more and more consumers now have the flexibility to do their work remotely anywhere in the world,” noted Melton. “In many ways, the types of coverage that digital nomads are looking for when searching for international health insurance are very similar in nature to that of your typical self-paying expatriate, and we see the demand for this type of insurance growing across the world.”
“We know more people are choosing to live the digital nomadic lifestyle, we see more digital nomads purchasing products, and we are excited to see this segment growing,” he continued. “According to numerous research studies, the number of digital nomads from the US alone has tripled from 2018 to 2021. We have seen similar trends in policy purchases, and we expect this demographic to continue to be a growing segment for our company in the future.”
Jernigan agreed: “The pandemic has empowered more to take on a location independent lifestyle and an increase in purchase.”
Daniel Durazo, Director of Marketing and Communications at Allianz Partners USA, said heightened concern for health issues following the pandemic had also caused an increase in policy uptake: “There has been new interest and increased awareness about travel insurance” he said. “Travellers booking trips are buying travel insurance more frequently than they were prior to the pandemic. We’ve also seen a surge in travel insurance demand through our online channels, such as airlines and OTAs.”
With Digital Nomads often spending time in countries where the medical facilities may not be as advanced as in their home country, or where better medical care may be available in bordering countries, we asked insurers how they tackled the problem when medical evacuation is necessary.
Catalan told ITIJ: "Here too, flexibility is the key word. It varies by product, but the general notion is that we would like to enable a policyholder to choose,” he said. “We try to be as flexible as possible with customers and to adapt to their lifestyle. If they wish to be repatriated, then our cover is designed to cater for that eventuality. However, if they wish to still travel the world in whatever situation they might face, we are able to cater for that as well.”
We try to be as flexible as possible with customers and to adapt to their lifestyle
Melton explained that IMG offers both repatriation to the client’s home country and cross-border care, depending on the situation: “IMG offers several products that provide repatriation coverage back to the traveller’s home country. Repatriation benefits can be triggered by a number of events. One example of this could be repatriation after a medical evacuation has taken place or during a serious health situation. By getting that traveller back to their home country, it allows them to continue care in a familiar environment and receive support from family and friends. Repatriations are typically initiated by an attending physician, and the requirements are based on medical criteria or medical necessity.”
“Cross-border care is also offered in our products, and in many scenarios, encouraged,” he continued. “IMG strives to provide our travellers with affordable and quality care to obtain their medical treatment needs, including emergency situations where treatment cannot be obtained locally.”
“The benefit from this approach is keeping our insured population healthy and promoting an overall sense of wellbeing.” he continued. “Depending on the IMG plan in question, there are some limitations to covered evacuations, repatriations, and cross-border care that must be met, such as medical criteria and the recommendation coming from an attending physician. Not all of our plans have the same level of benefits, so prospective travellers need to give thought to what their potential needs may be while travelling or residing outside their home country prior to purchasing an insurance policy.”
Riley said that for True Traveller, it’s ‘totally up to the treating physicians and our assistance service’ as to when or how someone needs to get to a centre of medical excellence. He added: “We try to avoid repatriations where possible as it’s the end of the trip, but we get them every month, usually as a result of massive trauma sustained in an accident. But, in parts of Africa, South America and Asia, we have, and will continue to, move someone to a neighbouring country for expert medical care when it simply isn’t available where they are. If they are then recovered enough to continue their trip after that care, then off they go. If not, and they may need many months of rehabilitation, then they’ll be returned home.” he concluded.
Jernigan told ITIJ: “Insured Nomads provides cross-border care with medical repatriation/transport to the most appropriate medical facility. We are including evacuation for natural disaster, political unrest and terrorism.”
A look to the future
Catalan outlined adaptability as being key for the future: “I believe the insurance needs of this community will evolve as the trend evolves and stabilises. Nomads have unique needs compared with those who do not travel as frequently or as far. The world is developing to accommodate these phenomena. More and more countries offer adapted and suitable residencies and temporary visas for nomads to attract them to their territories,” he said.
“The pandemic has made things change very rapidly,” he continued. Any insurer who aims to enter this market and cater to this unique community must understand the fundamental requirement to adapt themselves very quickly as well to support this everchanging landscape.”
Riley said the most crucial aspect of these policies is that both insurer and client are satisfied with the product and the service: “The main thing is everyone must remain happy with the proposal. The customer, as they ultimately pay in, and the capacity provider, as they essentially hold the big bag of cash. At the end of the scheme, if the bag still has enough cash there, the future is good.”
For Melton, customer feedback is key to ongoing product development: “A fundamental aspect of IMG’s success has always been listening to our travellers, understanding the ever-evolving benefit needs they have, and improving our products to meet those needs.”
Jernigan agreed that listening to customers is key: “Our industry must be increasingly aware that clients are fighting the feeling of mistrust of the providers that are taking their money, yet aware of low utilisation with little return and relationship. Remote workers are not vacationers/holiday travellers, but are more affluent and savvy to economics of healthcare and risk transfer, so we must all be customer centric.”
He also highlighted the importance of digital innovation: “The future will be a more digital experience, stronger tech integrations and customer focussed rather than the PDF attached to an email. One way that insurers will need to keep us is by accepting crypto currencies for payment – this goes into effect next month through our partnership with CoverCompared.com Digital nomads use alt currencies so if we want to reach this market accepting their form of payment is essential.” he said.
Travel insurance continues to be top of mind for travellers as Covid protocols and restrictions vary by location, and for Digital Nomads, the opportunities afforded to them during the pandemic seem to be lasting beyond the current phase of intermittent lockdowns, with remote working a genuine possibility for many. Governmental requirements for comprehensive long-stay travel insurance or international private medical cover means that for providers of these insurance policies, there is a lot of potential in the market.