The evolution of travel insurance distribution channels
Robyn Bainbridge explores how travel insurance distribution channels are evolving, and looks at what made the overall transition to digital necessary
It’s hard to talk about anything these days without also talking about coronavirus – and that even extends to travel insurance distribution channels. Over the past year alone, the landscape of travel insurance has changed dramatically. Customer centricity has become a crucial consideration when designing new travel insurance products, as has the focus on enhanced digital offerings. Indeed, both have played a pivotal role in ensuring the endurance of the travel insurance market during these difficult times.
US-based VisitorsCoverage’s CEO and founder Rajeev Shrivastava reasons that over the last few decades, and thanks to the ‘explosion of travel’, the travel insurance industry has grown and evolved. He tells ITIJ that with this ‘travel explosion’ came the emergence of new travel demographics, including multi-generational and adventure travel. This, in turn, led to specialty coverage such as cruise, family and hazardous sports cover, as well as a wealth of insurtech-related solutions that effected an increase in travel insurance sales year on year (thanks to the seamless and accessible policy-buying processes that these offered). And now, despite the slowdown caused by the global pandemic, Shrivastava predicts that an ‘explosion of travel insurance sales’ is once again on the cards. But as the purchasing process is just as important to get right as the product itself, ITIJ talks to insurers and aggregator sites to see how their distribution channels are evolving.
Covid-19 and engagement with travel insurance
Of course, Shrivastava’s view is shared by many in the industry, including Allianz Partners USA and Squaremouth, also in the US. “If anything, the global pandemic has increased awareness of the need for travel insurance,” Maggie Butler, Director of Customer Experience at Allianz Partners USA, told ITIJ; while Squaremouth spokesperson Kasara Barto noted that due to being impacted by the coronavirus pandemic, travellers across the globe are now ‘hyper aware’ of the impacts that external factors can have on their trips.
The facts are indisputable. This year, there seems to have been a seismic shift in the awareness of the importance of travel insurance when planning a trip abroad. Travel insurance is no longer being viewed as a ‘last-minute’ add-on, but now, as a travel necessity that is as inherently part of the travel planning process as finding a good hotel. Just look at the wealth of public-private partnerships that have arisen between travel insurers and local governments in the last few months, including, for example, the pushing out of travel insurance offerings via tourist boards.
“As Covid-19 will likely increase awareness of travel insurance in the long-term, the industry is going to need to adapt to the new concerns and provide applicable coverage,” asserted Barto. But what is it that customers are after, and how does this affect their engagement with different distribution channels?
Aggregator sites provide customers with the choice they crave
VisitorCoverage’s Shrivastava noted that in the US, the travel insurance market has always been overwhelmingly focused on trip insurance; before the pandemic, he says, most Americans gave little thought to travel medical insurance, especially when travelling internationally. But now, faced with the possibility of being quarantined or contracting Covid-19 abroad, the US travel insurance market is expected to see the largest percentage of growth.
Purchasing travel insurance through Online Travel Agencies has increased
Shrivastava also points out that in 2020, customers are understandably concerned with sourcing medical cover for their travels that includes Covid-19 cover; and US-based InsureMyTrip’s Director of Product and Services Suzanne Morrow notes that there is also an increased demand for travel insurance plans that include Cancel for Any Reason coverage. But, as it takes time to adapt products to meet these customer expectations, and as companies adjust to absorb their losses this year, there is considerable disparity in the level of cover offered by the global pool of international travel insurers. As such, it’s no surprise that aggregator sites – which provide a wealth of different travel insurance options on one accessible platform – currently have a massive influence on the travel insurance purchasing process.
Indeed, as highlighted by Shrivastava, the ‘domain ranking’ of aggregator websites, which he says is much higher than that of large singular insurance companies, demonstrates that customers are clearly looking for numerous choices – and not just from a pricing perspective, but in finding the ‘right match for their travel needs’.
Case in point, Barto tells ITIJ: “Following Covid-19, we were able to innovate and develop new website search features and quote prompts designed to help travellers find available policies for these new and evolving concerns,” she said.
Customers want a process that is simple, easy and fast
But it is not just aggregator sites that are pioneering in the field of travel insurance distribution. Allianz Partners USA’s Butler notes that with the decline in international air travel, more and more customers are taking domestic road trips – and this has meant that purchasing travel insurance through Online Travel Agencies (OTAs) has increased, as OTAs are a primary supplier of rental car inventory. Elsewhere, InsureMyTrip tells ITIJ that it has launched a ‘ground-breaking’ ‘Covid-19 recommendation tool’ to guide travellers towards plans best suited to guard against Covid-19-related travel concerns.
“When purchasing direct or through a travel advisor, customers expect the same high-touch, personalised experience they always receive from the hospitality industry. Conversely, customers purchasing via online distribution channels tend to seek out efficiency and ease of use. Regardless of these differences in expectations, in general, what customers really want is for the process to be simple, easy and fast,” summarised Butler.
Understanding is still lacking
Still, as Barto is quick to point out, travel insurance policies are still considered difficult to understand, so even with tech-savvy customers finding and comparing policies online and through other enhanced digital offerings, there is still a resounding need for live customer service agents during the sales process. Barto tells ITIJ that this is why Squaremouth incorporates a live chat feature on its website – allowing customers to contact the company in real-time.
aggregator sites … currently have a massive influence on the travel insurance purchasing process
Shrivastava added: “Whether a brokerage, travel agency or a third-party reseller, customer service teams will need to grow, and product knowledge and training will be an indicator of who succeeds in a post-pandemic world where travellers will need more facts and assurance than ever before.”
But, as Shrivastava also reasons, it’s unrealistic to expect resellers to devote large chunks of time learning policy coverage options and all of the new Covid-related products coming to the market – this is why travel insurance comparison sites exist. But, for more case-specific information, live customer service agents, for example, are still able to provide that added assurance that travellers sometimes need when faced with a wealth of different options.
For example, Barto explains that for seniors, and also for visitors to the US (where there is no universal healthcare system, and where many travellers may not know the level of medical travel insurance they need to purchase should they need help with the high cost of medical care), live customer service agents play an integral role in helping customers untangle which travel insurance offerings available to them they should consider.
Both customers and resellers need to be educated
But Shrivastava takes it one step further. He insists that while resellers need not commit all of the latest products to memory, they do need to increasingly devote resources and training to educate their customer service agents and provide ‘extensive knowledge centres’ on their websites that will help the customer make informed purchase decisions.
Currently, says Shrivastava, not all distribution channels serve customers to the best of their abilities. He argues that the ‘big travel insurance providers’ rely on a huge body of sellers: “And, unfortunately, most of these are low-quality operations that lack the technology, customer service, and educational training resources required to provide their customers with reliable recommendations when selling them travel insurance.”
He also notes that travellers who typically use travel agents generally purchase travel insurance from their agents – but this is not ideal either, because most of the agencies or brokerages that sell travel coverage are ‘mom and pop’ operations and many of these travel agencies’ core product is selling travel packages and not insurance, he says.
“Educating the customer is the most important element in the sales process, and when there is a lack of product knowledge, the customer is the one who suffers,” Shrivastava proclaimed. “In my observation, most people are sold the wrong type of policy due to the lack of industry standards in requiring product knowledge education.”
Technology to the rescue?
As always, enhanced technology offerings, including chatbots and machine-learning options, look to be the Holy Grail for travel insurance distribution channels. We already heard that customers want simple, easy, and fast solutions when acquiring travel insurance products, and chatbots are designed to provide instant answers to customer queries. But we now also know that in 2020 and beyond, customers want to be assured that they have the right level of cover.
“Technology platforms that are driven by AI will offer a repository of all available travel insurance policies and recommendations based on country of origin, destination, medical history, and age,” said Shrivastava. “These branded, turnkey solutions have the ability to scale [up] without huge financial investment, and provide a multitude of policy options that allow agents to steer their customers to the right purchase.”
What’s more, machine-learning opportunities presented by digitally enhanced offerings are only going to improve the customer journey and the efficiency of travel insurance distribution solutions. As Butler notes: “By utilising anonymised information about a customer’s trip, a personalisation engine quickly takes multiple factors into consideration to match the right product to that trip. Even better, the engine continues to learn and improve every day – all to the benefit of the customer.” She summarises that the advantage today is that technology can expedite that process to deliver an even more relevant solution, faster.
not all distribution channels serve customers to the best of their abilities
In all, Butler notes that customers are increasingly expecting more automation and more self-serve capabilities with their insurance plans, and that benefits such as a quick response to claim inquiries, clear and timely claim status updates, and transparency as to what is and is not covered by their plan, are also all top of mind for customers. “Customers want to feel safe and secure when travelling, and they expect travel insurance distributors to meet that need with technology such as mobile apps and added services such as assistance and concierge,” Butler said.
Distribution key to the success of the overall travel insurance industry
Alike the ‘explosion of travel insurance’ that Shrivastava referred to as being a reaction to the surge in travel over the last few decades, he notes that the ‘explosion’ of specialty insurance policies is proof of the industry responding to the customer needs and desires of 2020. “And this will continue as post-pandemic travel finally resumes,” he said.
Much like travel insurance offerings, distribution channels must also continue to adapt to meet the evolving needs of customers looking to find cover for their next trip, notes Barto. But it is especially important that distribution channels for travel insurance, more than any other line of insurance, continue to evolve to meet the needs of the market. Barto speculated: “The travel insurance industry has always been in the shadow of other forms of insurance that offer recurring revenue like life insurance and health insurance. Faced with sales increases of at least 50 per cent, we need to ensure that all distribution challenges are met.”
As long as customer access and product transparency is made a priority (and this can be streamlined via the efficient integration of technology), even with the continuously chopping and changing travel requirements and policy inclusions, travel insurance distribution can be streamlined to meet the needs of the travel insurance market and today's savvy traveller. ■