While the pandemic has wrought havoc on the economy globally, few industries have felt the impact as acutely as travel and tourism. By March 2020, the World Economic Forum estimated a US$880 billion-dollar impact to the travel industry by the Covid-19 pandemic. Nine months later, Forbes estimated close to a trillion dollars in lost revenues.
Insurtech offers new opportunities to draw in customers
Meanwhile, in 2020, insurtech startups collectively raised $7.1 billion, which was nothing compared to the $7.4 billion they raised in H1 2021. The insurtech boom proves an interesting counterbalance to the travel slump.
Digital acceleration and an increased awareness of risk have combined to present travel insurers with emerging opportunities to increase productivity and better serve customers.
Over the course of the pandemic, venture capital investors watched in awe as decades of digital behaviours rapidly accelerated to become commonplace practices in a matter of months. For many startups, digitally native and acutely attuned to customer needs, this has meant near-frictionless sales. While it is widely known that remote work, remote healthcare and ecommerce emerged as early winners in the dramatically changed pandemic world, it was difficult to imagine how much our new world would be shaped by a consciousness about risk.
More fundamental than behavioural adjustments designed to adapt to health advisories, human beings are experiencing a renewed and profound sense of what it means to be at risk. Our heightened state of vigilance means we are much more inclined to purchase protection products, as long as these products are modern, and responsive to emerging needs.
Designing bespoke products for customers
To identify how best to capitalise on post-pandemic awareness and customer behaviours, travel insurers can focus on a few tech trends that were already ripening, pre-pandemic. Three main focus areas feel especially relevant to today’s travel insurer:
- Developing data-driven product delivery infrastructure
- Parametric products
- An increased focus on telehealth.
Today’s traveller is offering insurers a plethora of valuable information even before they purchase a protection product. From web searching behaviours to destination insights, important data is readily available that allow the insurer to build a comprehensive picture of its customer and actually design products that best serve them. Asking just a few questions or purchasing third-party data are outstanding ways to complete the picture. By maximising data assets, travel insurers can design bespoke products on the fly to truly personalise the customer experience. Moreover, thanks to APIs, these purchasing journeys can start on any digital property where the protection product is embedded.
Embedding insurance in online journeys is becoming more and more popular. Unlike multi-page forms and totally irrelevant offers of the past, today’s customers can be shown relevant products during their trip planning and travel purchase experience. APIs enable the sharing of data and product architecture to allow for seamless quote and bind experiences, where relevant data is harnessed from travel sites and marketplaces and cross-referenced with underwriting and pricing guidelines.
Parametric products, successfully deployed by travel insurers in the form of flight cancellation policies, have the opportunity to capitalise on this data journey to become even more sophisticated. Complex weather risk and its attendant financial impacts are the increasing focus of insurers. Weather-related protection products should provide comfort to travellers beyond flight cancellation. Parametric products can, indeed, be created for any circumstance where there is a reliable index. And many vacations lose their sheen in the wake of inclement weather. The benefits to these products are vast: customers love the ease with which parametric products operate, and insurers love having an accurate sense of losses. Additionally, because parametric insurance eliminates the claims process entirely, these products are highly cost-efficient from an operations perspective.
Telehealth can help you meet your customers’ needs
Many people purchase repatriation insurance in order to deal with catastrophic medical events that might befall them on a journey. But recent innovation in telemedicine could provide skittish travellers with a far less extreme product, designed to engender a sense of security, and the confidence to get back to leisure travel post-pandemic. Insurers and healthcare providers have already demonstrated tremendous resilience in their near-immediate adoption of emerging telehealth solutions. After all, it is not only expense and language barriers that make travellers nervous about consulting physicians in foreign lands; familiar cultural predilections and bedside manner can go a long way toward easing a worried traveller’s mind. By including telehealth components or designing telehealth microproducts, travel insurers can harness emerging technology to meet emerging customer needs.
Tech as a service enabler
From how travel insurance products are designed, to what they include and how they are delivered, technology offers solutions to long-standing user experience problems with travel policies. At every step of the value chain, all the way through to product design, emerging technologies targeting risk management will provide travel insurers a multitude of opportunities to respond to consumer needs post-Covid.