It's a Nordic thing
The Covid-19 pandemic has impacted travel in countries around the world, and the Nordics – consisting of Denmark, Finland, Iceland, Norway and Sweden – are no exception. How have travel and travel insurance rebounded in the region, and what does the future look like?
After some uncertain years, as of summer 2023, it’s safe to say that reports of the global tourism industry’s death have been greatly exaggerated. According to the latest World Tourism Barometer from the United Nations World Tourism Organization (UNWTO), twice as many people travelled at the beginning of this year compared with the equivalent period in 2022 – an estimated 235 million tourists globally. In the first quarter of 2023, international arrivals reached approximately 80 per cent of pre-pandemic levels; testament, in the words of UNWTO Secretary-General Zurab Pololikashvili, to tourism’s ‘unique ability to bounce back’. Of course, numerous specific local variables affect how this global recovery has manifested on a regional level, and every country has had a mountain to climb.
The Nordic region has traditionally been a major source market for outgoing tourism – relatively high levels of disposable income, plus a long winter period and more generous than average annual holiday allowance for workers makes it one of Europe’s biggest outbound markets. Nordic countries’ participation in the Schengen Agreement has made travel to other participating destinations relatively hassle-free, and Nordic tourists also tend to spend more than the average European tourist, making them a valuable demographic. So how have conditions improved in the region when it comes to outbound travel?
The summer season marks a higher frequency of calls to the emergency centre, though these cases tend to be lower complexity
Slow and steady
In 2019, Denmark recorded 9.09 million outbound tourist departures; this dropped to 4.23 million in 2020, then to 3.18 million in 2021.
However, international departures then rose by 105 per cent in 2022, according to data analytics and consulting firm GlobalData, and all signs point to further recovery this year. Finland, meanwhile, saw outbound numbers hit lows of 2.7 million in 2020 and 2.3 million in 2021, but international departures subsequently saw an impressive 196-per-cent rise in 2022.
According to a spokesperson for SOS International, an assistance company catering to Nordic travellers via its alarm centres in Denmark, Sweden, Norway and Finland, this narrative seems to be roughly reflected throughout the region. “Based on incoming cases at our emergency centres, we can see that the Nordic countries have witnessed a gradual increase in outbound tourism, as more people are regaining confidence and venturing beyond their own national borders for vacation purposes,” they said. “However, it is important to note that the overall volume of travel is yet to reach the levels observed prior to the pandemic. At SOS International, our emergency centres have observed a level of activity – as measured by the number of assistance cases – which remains below the index of 100 recorded in 2019, during the initial half of 2023.”
The spokesperson also told ITIJ that these figures are generally supported by data from commercial airline traffic. “During the first six months of 2023, commercial airline traffic in Europe has reached between 86 per cent and 92 per cent of 2019 levels,” they explained. “However, it is expected to approach 2019 levels during the summer of 2023.”
Traveller profiles
In terms of where Nordic travellers are going now that restrictions have been lifted and Covid-19 has become more manageable, it seems that old habits die hard. Before the pandemic, according to SOS International, the most popular destinations for tourists from the region were Greece, Spain, Thailand, Turkey and the US. “Post-pandemic,” they told ITIJ, “these countries remain primary destinations, and as such the primary travel patterns are intact.”
Looking a little more closely at the individual Nordic countries, the top five most popular destinations for Danish travellers, according to GlobalData, are Sweden, Germany, Spain, Italy and France. For Finnish travellers, the top five are Sweden, Estonia, Spain, Germany and Greece, while Icelandic travellers favour the UK, Denmark, the US, Germany and Latvia. Norwegian travellers’ top five are Sweden, Denmark, Spain, the UK and Greece, and for Swedish travellers, the top five preferred holiday destinations are Spain, Denmark, Germany, France and Greece.
SOS International also offered some insights into the kinds of assistance cases that company staff have observed via their emergency centres. As far as typical claims go, during the summer travel season, the company tends to deal with widespread reimbursement of expenses in relation to light medical assistance cases, including stomach infections, minor scratches, sunburn and the like. The other most frequent non-medical claims tend to be related to lost, delayed or damaged luggage.
The spokesperson said: “The summer season thus marks a higher frequency of calls to the emergency centre, [though these cases tend to be] lower complexity, whereas the winter season is the opposite, with lower case frequency and higher case complexity. This is caused by a considerable amount of skiing accidents, with Nordic travellers needing to be transported back to their home country (primarily Danes).”
Based on incoming cases, the spokesperson added, and despite healthy growth in destinations further afield, it looks as though Nordic travellers may continue to prioritise domestic and regional travel, opting to take holidays closer to home.
The Nordic attitude to insurance
Broadly, across the Nordic countries, the attitude towards travel insurance – and insurance in general – is fairly positive. The general standard of customer understanding of the product is high, and take-up of coverage is therefore widespread. In Sweden, for example, as both Insurance Sweden and SOS International pointed out, travel insurance is automatically included with home insurance, something that the vast majority of people have. Nordic customers also generally prize service over cheapness, unlike the typical customer profile in some other European countries, so they will usually favour a well-established brand offering streamlined processes and good customer service. Customer retention is high, with consumers in the Nordics tending not to shop around and change providers if their experiences have been satisfying.
In Sweden, travel insurance is automatically included with home insurance, something the vast majority of people have
It should be said, however, that this is affected by the way insurance is typically sold in the region. Rather than individually renewing their various insurance policies when the time comes to do so, a customer’s policies across all lines are renewed at once. Convenience, it seems, is key to satisfaction. Speaking earlier this year, Shreyas Vasanthkumar of insurance software provider Duck Creek Technologies, pointed out that customer retention levels in Norway were ‘around 80 or 90 per cent’: “They’re nowhere near that in the UK. Loyalty, or lack thereof, is a big issue in the UK. In stark contrast, it seems to be a non-issue for Nordic insurers, particularly in Norway.” Cultural and administrative factors also play into the generally positive attitude towards travel insurance in the region. Denmark, for example, requires incoming visitors from certain countries to show proof of travel insurance, while Finland’s Ministry for Foreign Affairs regularly advises its own travelling citizens to purchase policies for their trips. As is often the case, if government authorities publicly promote the importance of appropriate coverage, this has an effect on people’s attitudes.
The regional travel insurance sector’s post-pandemic recovery has followed a similar trajectory to tourism in general. In 2022, for example, Nordic insurer Tryg noted that the number of travel insurance claims that it dealt with had tripled compared with 2021, with holiday-starved travellers opting for longer and more expensive trips to make up for lockdown cabin fever.
“The majority of people have travel insurance,” SOS International’s spokesperson told ITIJ. “Consequently, Nordic travellers are used to having someone to call if they have an emergency or experience something unexpected while travelling – and thus they also expect swift and qualified assistance, no matter where and what type of assistance is required.”
The technology factor
The Nordic market is relatively mature, both in terms of insurance and general finance – Helsinki-based universal bank Nordea, for example, has been operating for more than two centuries. However, this can be a double-edged sword, with many in the recent new wave of local insurtech startups finding that creaking legacy systems with poor compatibility can pose a barrier to innovation.
Barriers can be navigated, though, and a wave of technological innovation has swept across the region. Sweden, for example, has seen a plethora of new startups moving in to disrupt the market in recent years, and providers like Danish insurtech Undo are tempting customers with travel insurance solutions offered on a pay-as-you-go basis.
And while generally high rates of customer satisfaction mean that Nordic consumers aren’t necessarily crying out for a side of cutting-edge technology with their meal, as the famous movie quote goes, ‘if you build it, they will come’.
“We are constantly adding to our digital service offering,” said SOS International’s spokesperson, “to ensure that end users (i.e. insurance holders that we provide assistance to on behalf of our customers, the insurance companies) can easily get access to the assistance that they need.”
Examples of such digital provisions include: digital case creation, whereby end users can create and send a case directly to the company’s alarm centre by answering a few questions, making for a more efficient alternative to a phone call; ‘find a doctor’ services, where end users can get directions to the nearest appropriate treatment facility by digitally providing information on their condition and location; digital consent, which provides automatic collection of consent from the end user, allowing the company to use whatever personal data is required to deliver fast and efficient assistance; and online claims, whereby end users – whether business, personal or expatriate customers – can submit claims by providing only a limited amount of information. “Our end users demand easy and flexible access to our assistance services,” added the spokesperson, “and by delivering solutions such as these, we aim to cater to these demands.”
Nordic travellers are used to having someone to call if they have an emergency or experience something unexpected while travelling
Looking ahead
While the Nordic region has seen some financial instability in recent years, which has had an impact on quality of life and levels of disposable income, it doesn’t seem to have had too much of an effect on consumers’ attitude towards travel insurance. Convenience, efficiency, ease of access – these factors are worth their weight in gold, and if customers can go about their business smoothly and easily, they will likely follow their insurers’ lead.
While that could, in a pessimistic scenario, lead to complacency on the part of insurers, there is a strong spark of technical innovation in the region. Going forward, it should stand the industry in good stead.