Despite efforts by governments and by insurance providers, too many people still go on holiday without buying travel insurance. How can the industry and its partners address an issue that will not go away? Robin Gauldie investigates
The problem of holidaymakers travelling without insurance seems to be a global one, affecting large developed economies such as the US and the UK, which are huge markets for travel, but also affecting smaller source markets and developing nations. Questioning more than 4,000 travellers from New Zealand, global research firm TNS found that 31 per cent of New Zealanders holidayed without taking out travel insurance. In Australia, a survey carried out by Quality Online Research for travel insurer Australia Post showed 40 per cent of the 18-29-year-old age group in a sample of 1,000 Australians wouldn’t take out cover. Of those aged over 50, one in four travelled abroad without insurance. In the United Arab Emirates, research by global insurance provider Zurich found that almost 60 per cent of a sample of 748 residents never buy travel insurance when going abroad, and a further 32 per cent take out cover only occasionally. And at the beginning of the 2012-2013 winter sports season, the UK’s largest insurer, Aviva, reported that 37 per cent of those planning a winter sports holiday had not arranged to buy insurance. Of those, one in four had no plans to buy insurance, and a further 17 per cent were undecided on whether to buy it. According to Aviva, those taking their first winter sports holiday were least likely to be properly insured for the trip. Only 40 per cent of first-timers surveyed had bought winter sports travel cover, the insurer said. However, Aviva’s research showed that more experienced snow sports enthusiasts are more likely to be insured: of those with cover, 70 per cent considered themselves to be expert, while only 45 per cent thought of themselves as beginners.
The disparity between less-experienced travellers and more mature holidaymakers is highlighted too by recent figures from the UK Foreign and Commonwealth Office (FCO), the British travel industry association ABTA and by over-50s insurance specialist Saga. ABTA’s research showed that younger travellers continued to be the group least likely to take out travel insurance. Almost half of those aged between 15 and 24 regularly travel without cover, according to ABTA spokesman Sean Tipton. “We found that almost half of 15-24 year olds don’t take out insurance, and this is reflected in the many high-profile cases featured in the media, most of which seem to involve this age group,” Tipton reports, noting that the 50 per cent leap in the overall number of British people citing cost as a reason for not buying insurance reflects the difficult economic climate.
Older travellers can also be lackadaisical. The FCO’s research revealed that one in 10 over-55s sometimes skimped on travel insurance. Saga’s survey, meanwhile, revealed that although under- 50s were more likely to travel without cover, 10 per cent of those over 50 had travelled uninsured during the last five years. Across the Atlantic, the Travel Health Insurance Association of Canada (THIA) says some studies indicate that around 80 per cent of ‘snowbirds’ – retirees who travel to the southern US to escape Canadian winters – buy insurance each year. As many as 44 per cent of Canadians aged 18 to 34, however, bought no insurance when travelling to the US, according to research by Ipsos Reid. In the UK – and in Australia and NZ – many travellers assume that their government will pay for hospitalisation and repatriation, or that they will not have to pay for local hospitals and emergency medical care. ABTA’s latest report showed that one in three travellers in the 15-24 age group, and 17 per cent overall, mistakenly believe that the European Health Insurance Card (EHIC) will provide for all their needs, including medical repatriation. Other sources show that a significant number of holidaymakers think the EHIC covers them for travel outside the European Union (EU), whereas the EHIC is valid only within the EU and provides the same level of care available to local citizens under their national health service. In the case of poorer EU members such as Bulgaria or Romania, that level of care may fall well short of expectations. Meanwhile, cash-strapped Greece and Spain are reported to be increasingly unwilling to provide free medical care for holidaymakers with EHICs. Similar attitudes are common in Australia and New Zealand. TNS’s research revealed that 25 per cent of Kiwis would rely on New Zealand’s reciprocal health agreements with countries such as the UK and Australia. Australia Post’s survey suggests that many Australians place their trust in their country’s reciprocal agreements with countries including Belgium, Finland, Ireland, Italy, Malta, Netherlands, New Zealand, Norway, Slovenia, Sweden and the UK. Australian insurers point out that these agreements – like the EHIC provisions between EU states – do not provide limitless care, and provide no cover at all for medical repatriation. Are people from countries such as Britain or Australia – who can take for granted the extensive medical and emergency services provided by the state through systems such as Britain’s National Health Service or Australia’s Medicare – more likely to ignore the risks of falling ill or suffering an accident abroad? Conversely, are people from countries where the state provides less comprehensive care more likely to buy travel insurance when going abroad?
the 50 per cent leap in the overall number of British people citing cost as a reason for not buying insurance reflects the difficult economic climate
While the ABTA survey showed a 20-percent increase between 2011 and 2012 in the proportion of Britons who bought no travel insurance of any kind, the US Travel Insurance Association’s (UStiA) most recent Travel Insurance Market Survey claimed that more than 124 million people in the US were covered by travel insurance and emergency services provided by USTtiA members by 2010, reflecting a growth of 29 per cent over 2008 and 20 per cent over 2009. Despite such increases, “I’m not so sure that the average American traveller is predisposed to purchase travel insurance,” says UStiA spokesperson Linda Kundell. Older travellers and some others with existing medical conditions, she says, may be motivated to purchase travel insurance if they are not covered for foreign travel by their existing health insurance.
But in the UK, the FCO’s survey indicated that one in five people would risk the validity of their travel cover by not declaring a condition that they are managing through medication. Ironically, in a recent poll by localpeople.co.uk, 20 per cent of British people cited a fear of being hospitalised abroad as a reason for taking their holidays in Britain.
The art of persuasion
Australia is trying to persuade its citizens to do more to help themselves. In November last year, its foreign minister Senator Bob Carr launched a nationwide campaign aimed at raising awareness of the risks of travelling overseas while uninsured. Smartraveller warns Australians that those without insurance are risking poor local hospital care and high medical bills if they are sick or injured while abroad. Given that a huge number of Australians choose to travel relatively close to home in Southeast Asia and Indonesia, the warning should resonate clearly, but it seems that travellers are quite happy to bury their heads in the sand.
The faces of the AU$2.6 million Smartraveller campaign include Natalie Hensby, who was badly injured in a boating accident in Thailand in 2010 and is now fully recovered thanks to a $100,000 insurance payout, and 23-year-old Erin Langworthy, whose narrow escape after a bungee jump accident in Zambia made headlines in 2011. Her travel insurance covered high-quality hospital treatment and saved around AU$50,000 in medical bills and, perhaps, her life, the campaign points out. Regardless of the tabloid headlines stating that a ‘miracle’ saved Erin Langworthy’s life, it was in actual fact the travel policy that she sensibly bought before leaving home. Other young adventurers have been less prudent. John Thain, president of the Travel Health Association of Canada, has cited recent cases involving uninsured travellers in an attempt to persuade more Canadian holidaymakers to buy insurance. He mentions cases such as those of 24-year-old Anna Leibenko, injured in a sailing accident in Croatia, who required emergency neurosurgery. Her friends in Canada raised the money to pay for her hospital bill and repatriation. Friends and local businesses helped to pay medical and hospital bills for 11-year-old Jaylynn Graham, who required brain surgery after falling ill on holiday in Jamaica. A public donors’ fund was set up for Canadian Robert Sitter, who suffered a brain injury after being struck by a vehicle in the US and whose family were left with a six-figure hospital bill.
Awareness-raising media campaigning has proven effective in the US, according to Linda Kundell. “Growing awareness has been achieved through educating consumers as to the benefits of travel insurance, mainly through marketing and PR activities undertaken by individual insurance companies,” Kundell says. The UStiA has not used high-profile accidents to illustrate the advantages of travel insurance. Instead, its publicity stresses the importance of having travel insurance against trips being delayed, cancelled or interrupted by illness or other factors. “There is a fine line between providing useful information and appearing to be ‘ambulance chasers’, says Kundell. “Baggage and theft are included in our information, but generally are not the focus of press releases, as other types of coverage may cover these.” ABTA’s Sean Tipton says that over-focusing on extreme cases may be counter-productive. “Customers may adopt a ‘that won’t happen to me’ mentality,” Tipton says. “Such incidents grab headlines and get people’s attention, more than a story about a stolen smartphone would.” ABTA’s annual research on travel insurance gets wide media coverage. The association is also often asked to comment and advise when uninsured British citizens are stranded abroad with large hospital bills. Tipton points out that ABTA collaborates with the Association of British Insurers when it issues advice, and works closely with the FCO as part of its Know Before You Go campaign. All of these awareness-raising exercises are valuable, but Tipton says they are only part of the solution. “Individual travel companies at the point of sale remain the most effective communicators about the need for insurance and explaining what it covers,” he adds.
“Individual travel companies at the point of sale remain the most effective communicators about the need for insurance and explaining what it covers”
In Australia, travel insurance will form ‘a significant component’ of a consumer financial literacy programme that will be launched by the Insurance Council of Australia (ICA) this year, according to an ICA spokesperson. The ICA’s online service also helps to match clients – including older travellers or those with pre-existing medical conditions – with suppliers. But, in Britain, regulation has deterred travel retailers from selling insurance and has made it difficult for tour operators to refuse to take a booking without evidence of insurance. When Britain’s Financial Services Authority was given responsibility for the insurance industry in 2007, the increased cost of regulation forced many companies out of the market. Travel agents now account for only 17 per cent of travel insurance sales in the UK. “The corresponding drop in people travelling uninsured is not just a coincidence,” says Tipton. ABTA has called for its insurance industry partners to support initiatives to reduce ‘overly burdensome’ regulation. In the US, insurers and travel retailers are hoping that legislation such as that recently introduced in California, which allows travel agents to sell insurance without a state licence, will encourage them to sell travel policies. As reported in ITIJ 147 California insurance law now in place, the UStiA and ASTA are working with some success to persuade other states to ease restrictions on the sale of insurance by travel agents. “Travel insurance is not a luxury item, it’s a necessity,” says THIA’s John Thain, and buying travel medical insurance from an ever-widening range of suppliers has never been easier. Getting that message across to travellers, however, still seems to be an uphill struggle.