The evolution of brokers in travel insurance
Faced with an ever-changing marketplace and hurdles such as the Covid-19 global pandemic, brokers have been forced to adapt accordingly and come up with new ways to compete with rivals and provide the service that their customers need.
ITIJ spoke to Graeme Trudgill, Executive Director of the British Insurance Brokers’ Association (BIBA); Chris Rolland, CEO of BIBA medical travel scheme provider, All Clear; Phil Kewin, CEO of the National Insurance Brokers’ Association (NIBA); and Beth Godlin, President of Aon Affinity Travel Practice, about how the role of brokers in the travel insurance marketplace has changed and how they think it will continue to develop. They discussed the effect of the pandemic on the industry, and how advances in technology have changed the way they work. They also gave their opinion on regulation and the importance of a successful partnership between brokers and insurance companies, especially when tackling problems in the current, unpredictable world.
Developments in the industry and effects of the Covid-19 pandemic
Graeme Trudgill and Chris Rolland explained how the role of brokers has become more important in the last 10 years, especially following the Covid-19 global pandemic. Trudgill explained that because ‘travel insurance is a complex purchase, which is why many more brokers offer to sell it,’ they strive to provide customers with a complete ‘rounded’ service. Rolland went on to describe how brokers can be ‘highly agile’ and act quickly for their customers in a time of need: “All Clear was the first to provide three months extra cover for all its annual medical travel policies sold in 2020 and quickly adapted to offer Covid cover for both emergency medical expenses and cancellations.”
“There’s a healthy role for brokers in the future,” believes Trudgill, “when you see the product and market innovation that happened during the Covid-19 pandemic.” He confirmed that the pandemic has greatly affected brokers specialising in travel. However, they were also able to use this as an opportunity to show first class customer care by ‘going the extra mile’ for their customers. “Some providers were able to extend time cover under policies already in place for people unable to return to the UK when the travel restrictions suddenly came into force,” he added. “Specialist travel insurance brokers were able to adapt policies to provide the cover that customers needed when they were ready to travel again.”
Godlin agreed that Covid-19 has had a significant impact on the travel insurance broking industry. “Over the past two years at the Aon Travel Practice, we have certainly been called upon to help our clients understand how this global health crisis is impacting their customers and to ensure our programmes are responding to their needs,” she told ITIJ. “By fostering a holistic relationship, as brokers, we can go beyond what a single product can offer to help our clients with business challenges.”
She described how the role of brokers has evolved to fit the demands of customers and the developments in the market: “As the world and decision making become more complex, brokers have been challenged to provide advisory services that rely on sophisticated data and analytics and deep knowledge of the markets and industries served, all of which are enabled by skilled talent and robust tools.”
The market will continue to develop and adapt to what is necessary as global travel habits shift and evolve, believes NIBA’s Kewin, who goes on to explain how brokers can help travellers find the most appropriate policy according to their needs: “The last few years have highlighted the differences in travel insurance and the challenges that can arise when dealing with claims. Understanding policy wording is critical, and travellers have suffered from not understanding this. Brokers have played a much more active role in selecting and placing travel insurance, and particularly through Covid-19, assisting travellers to successfully make a claim.”
Joe Cronin, President, International Citizens Insurance, observed that peoples’ insurance needs have become more complex since the advent of Covid, making brokers even more vital in the distribution of travel and international health insurance. He added: “Brokers can help clients navigate many policies to find one that covers them in the current situation. This requires brokers to understand the quickly changing international requirements and policy parameters. For example, when Costa Rica instituted a quarantine coverage requirement, we proactively sourced new plans that would fulfill the requirement in order to ensure our clients had options. Additionally, some policies have Covid-19 coverage only for people coming from (or going to) specific countries. Now more than ever, clients need the help of a broker to direct them toward a plan that will be effective for their scenario.”
Regulation of insurance sales
When asked about challenges for brokers from a regulatory point of view, Trudgill told ITIJ: “Regulation is an essential tool to protect customers. However, from a broker’s perspective, regulation must be proportionate to the risk posed. We want to see fair regulation that does not hinder customer service. Too much regulation has a negative impact on the customer. One of the most significant improvements for customers regarding regulation in recent years was the decision by HM Treasury to regulate the sale of connected travel insurance. This was very helpful in improving both outcomes for customers and the reputation of travel insurance.”
However, more work has yet to be done in the sector, and Trudgill said that BIBA is keen to see further acknowledgement by the regulators in the UK that travel insurance sales need to be viewed in the same way as general insurance. “Because all sales of travel insurance are now regulated in the same way by the Financial Conduct Authority (FCA), BIBA also firmly believes that the time is right to apply the same rate of Insurance premium Tax (IPT) to travel insurance to as other general insurance policies – 12 per cent.”
Aon Affinity Travel Practice’s Godlin, meanwhile, highlighted that as a broker, regulatory knowledge and adherence has always been crucial.
Advances in technology and their effect on insurance brokers
Improved technology has brought both benefits and challenges to the intermediary world. New innovative technology has made big changes to the insurance marketplace and brokers have been challenged to keep up with continuous developments. To maintain their place in the marketplace, brokers have needed to adapt accordingly and look for new systems and platforms that improve their service and match the sophisticated technology now used by insurers and other companies.
Godlin agreed that new technology has allowed brokers to work more quickly and efficiently, and she pointed out three primary benefits:
- An enhanced ability to create and offer relevant products to customers on a more customised basis
- An improved ability to provide faster service to clients and customers
- Easier access to data and analytics that can support more timely and accurate risk management.
According to BIBA’s Trudgill: “A small, focused broker can bring agile technology to a large multi-line insurer because it has the time to focus on smaller lines. It’s where being a specialist broker brings a real point of differentiation. Brokers are able to have white-labelled products online so their customers can buy policies at any time – and can also guide customers that need it about how much protection is being offered.”
New technology has also opened the door to video calling and virtual meetings, allowing brokers to work more remotely while maintaining important contact with clients and partners. This has been crucial during the global pandemic, ensuring that a vital part of the broker/client relationship was preserved.
What makes a successful partnership?
Providing a good service depends largely on a successful partnership between brokers and insurers. Godlin identified transparency and trust as key elements, as well as establishing and communicating shared goals and expectations. All Clear’s Rolland agreed that successful partnerships are built on a mutual respect for each other’s ‘core competencies’. He stressed that strong, long-standing partnerships allow brokers to provide a better service in both underwriting and claims. Teamwork has become even more vital in such an unsettled and unpredictable world.
With the global pandemic still ongoing, both brokers and insurers will have to stay on their toes and remain ready to work together to overcome new challenges and adapt to future demands.
With the challenges of the current situation, Trudgill summarised that ‘adaptability and agility are key’. Brokers will have to continue to adjust to ensure market dominance and to provide the best possible service for their customers. Godlin concluded that ‘the goal has always been to provide our clients with the knowledge they need to make better business decisions’. The future looks busy for brokers and Kewin predicts that ‘the market will continue to evolve as travel restrictions are eased worldwide and we return to some type of normal’.
Evolution of services remains a key part of the role brokers play in travel insurance provision. As Covid has demonstrated the need for customers to protect themselves and their travel investment, brokers can capitalise on this increasing awareness of the product and its benefits to show how integral they are in the distribution channel. Cronin told ITIJ:
“Travellers are much more tuned in to travel insurance now, especially in the US – but it can still be overwhelming for them. Brokers can more effectively show the points of difference between plans so travellers can get the best fit. Now that companies such as Marriott are introducing their own travel insurance, brokers can also help by increasing awareness of other insurance options so that potential customers are more likely to buy from insurers rather than their hotel or another travel provider.”
Find that niche, identify that partnership, and make yourself indispensable by demonstrating in-depth knowledge of the business – that’s how brokers show their strength and establish their value in the service chain.