Managing cover expectations

cover expectations
Let the buyer be aware

Do travellers know what cover they’re getting - and not getting - for their euros, dollars and pounds? Insurers and industry bodies tell David Kernek that improving consumer awareness could cut dispute costs and brush up the sector's reputation for fair play

Do travellers know what cover they’re getting – and not getting – for their euros, dollars and pounds? Insurers and industry bodies tell David Kernek that improving consumer awareness could cut dispute costs and brush up the sector’s reputation for fair play

One of the things the Romans did for us that wasn’t mentioned in Monty Python’s Life of Brian was provide astute advice to purchasers: Caveat emptor – Let the buyer beware. Based on the probability that the seller knows much more than the buyer about the product they are selling, it leaves the purchaser to accept the risk that the merchandise might not be flawless or everything the vendor claims it to be. It’s a conundrum that remains with us 2,000 years later, and nowhere more so than in a travel insurance market that often presents buyers with a T&C document that, at 37,000 words across 60 pages, can be twice as long as a Shakespeare play.

The scale of the consumer awareness problem was highlighted starkly in the findings of a Quantum Market Research survey commissioned by Australia’s Insurance Council (ICA) and the Australian Government’s Department of Foreign Affairs and Trade (DFAT) and published in July 2018. Researching the behaviours of Australians travelling to South-East Asia, it reported that:

  • 65 per cent engaged in risky activities, from excessive drinking and water sports to riding motorbikes and horses.
  • Of those with insurance, 58 per cent did not know for sure if their cover included motorbike and moped riding.
  • One in five travellers with pre-existing conditions had not checked to see if their insurance cover was adequate.
  • 52 per cent of insured travellers were not ‘very confident’ that they had chosen the best policy for their needs.
  • Of those whose destination had a ‘high degree’ travel warning on the DFAT’s Smartraveller website, only 39 per cent checked to see if their policy would cover them.

Kim Murchie, Co-Founder of Go Insurance in Australia, talked to ITIJ about a range of indicators that flag up low levels of consumer awareness. “The most obvious one is at point of claim. It usually manifests as disappointment or frustration expressed at the lack of policy response to the claim, when the response is limited by sub-limits or when elements of the claim fall outside the scope of cover provided. Unfortunately, some policyholders read the policy only at the time of making a claim or after they have had a claim denied. In such cases, although at the time of purchase they confirm having read, understood and agreed to the policy terms, they admit to not having done so.”

Insurers often experience an increased volume of queries following events such as extreme weather

Murchie said her company also sees a lack of awareness at point of sale, but that in the initial phase of the customer journey they have the opportunity to explore the customer’s requirements, answer questions and explain the scope of cover provided. “Often we experience an increased volume of queries following events such as extreme weather and terrorism which might have been widely reported in mainstream media,” she said. “In such cases, we see spikes in consumer enquiries around how our policy might or might not respond to these types of events. These questions come from both prospective customers and existing policyholders, so in the case of the latter, this supports the notion that they either haven’t read the policy or have perhaps failed to understand it.”

She says that if a policy isn’t able to respond to claims involving urgent medical treatment overseas or repatriation, some customers turn to social media to vent their disappoint or set up crowdfunding initiatives, or both. “A lack of consumer awareness regarding standard travel insurance provisions is often evident in these forums, with the insurer being unjustly vilified for not honouring the claim. Lack of awareness can also be seen in the number and type of referrals to external dispute resolution forums. Disputes are increasing, and there is consistency in the type of disputes being referred – denial of claim due to pre-existing medical conditions, for example.”

A blanket assertion that insurance companies are dodgy is unfair

She points to a number of reasons why consumers might not be aware of what they’re buying: “In some cases, there is general apathy towards reading insurance policies to assess the cover. Organising travel insurance is hardly the most exciting part of planning a holiday and some travellers just take the chance a policy will provide adequate cover. Some consumers consider all policies are more or less the same or don’t understand the specific risks which attach to their destination, health status or planned activities. Some just don’t appreciate what can go wrong and how they might be affected.” Others are intimidated by the size of an insurance policy and how it is worded, explained Murchie.

While policies should now be written in plain English, she said, some contain legal and insurance jargon, which can be confusing. “With a multicultural society, we should not overlook the potential of language barriers. Australia has an ageing population and some older travellers are represented by younger relatives during the purchase process. This presents the potential of discord between the traveller’s insurance needs and the younger relative’s assessment of suitable cover.”

Some customers can find policy wording confusing

Online purchase can also be a problem, she adds. “There’s no doubt that the ease and speed with which a policy can be bought online can impact negatively on the consumer’s awareness of what the policy covers. It is very easy to tick the box to confirm that you have read the policy, but very often this is not the case, with many consumers preferring to just buy without reading.”

At InsureandGo in Australia, Head of Sales, Digital and Marketing Jonathan Etkind points out that the DFAT survey also found that 89 per cent of Australians travelling overseas had insurance cover. “This indicates that the majority of Australians are aware of the benefits of travel insurance and how important it is to ensure they are covered while away. However, the main area of awareness that needs improvement is for travellers to understand their policy inclusions in more detail, and make sure they get the right cover for their needs.”

Buying online, he says, can be a help, not a hindrance. “The benefit of purchasing travel insurance online is that people can easily read the product inclusions and compare different types of policies in an accessible manner, which enables them to make the decision process simpler on what policy is best suited for their needs. As a result of the online space, many providers have been able to customise their cover to create more suitable products for travellers, such as a policy for winter sports or cruise-specific travel.”


Tackling the issues

The challenge is to encourage buyers to be aware of what is and what is not included in the cover they’re purchasing, as Sarah Cordey, Communications and Campaigns Manager at the Association of British Insurers (ABI), explains: “The insurance industry is concerned about its reputation; it pays out millions in claims every day. But there is concern around people whose claims aren’t paid and who think they haven’t had the pay-out they should have received. Tackling that is about helping consumers to understand properly the products they’re buying. It’s very bad for both sides if you’ve got someone on the phone trying to claim for something they haven’t actually bought cover for. No-one wins in that scenario. It’s much better to try to address that upfront and encourage people to spend a bit longer thinking about the product they’re buying and make a more conscious decision about what they want included in the cover.”

The ABI began tackling the problem head on in October 2018 when at its first travel insurance conference it unveiled the expansion of its consumer education initiative – The Insurance Experiments – to cover travel topics. Publicised by ABI-funded 20-second advertisements on Facebook and Instagram, it’s a stand-alone website featuring cartoon-like videos and information pages targeted at consumers who might not choose to go looking for it.

Organising travel insurance is hardly the most exciting part of planning a holiday

“We have to accept that most people don’t find buying insurance very exciting,” Cordey told ITIJ. “Even though it’s very important, they want to get it done quickly. As an industry, we can’t just make it the job of consumers to seek out and read up on boring text, which is why we have made something that’s more colourful and fun and promoted it through social media so that consumers might absorb a small amount of useful information without really realising it … even if all it does is jog their memory the next time they book a holiday, when they might remember that funny video they’ve seen about travel insurance."

Earlier Insurance Experiments promotion periods – covering property, motor and business insurance – scored three million online impressions and approximately 300,000 video views and attracted 12,000 people to the website. “They’re only top line messages; we’re not pretending they cover everything people should think about,” says Cordey. “The messages will pop up during promotion periods on social media where people are browsing anyway and just give people a bit of a nudge and remind them that this is something that’s worth thinking about … and maybe they’ll take away just one thing that’s really important about travel insurance. Given that we’ll likely be competing for attention with comedy cat videos and lists of 59 things you never knew about avocado, this project had to look different to usual ABI materials. The animations feature a core cast of scientist characters finding out about insurance while working in the lab and relaxing at home. Their mission? To teach people about insurance without them even realising.”

Travel cover, she says, offers ‘an awful lot of choice’ for consumers and there are a lot of variables. Consumers, therefore, need to be able to understand the significance of the decisions they make about such things as excess limits and what’s actually covered – airline failure and luggage value for example – and why medical histories are important. “Those are varying details that people might not be aware of. They go online to look for a travel policy, they see something fairly inexpensive, they buy it and think: job done. It’s really about trying to reduce the number of declined claims by trying to ensure that people have bought the right cover,” said Cordey.

Agreement that more needs to be done to improve consumer awareness comes from René Gillet, Director of International Sales at Dr-Walter in Germany. The company’s principal international business is travel insurance for students, but it also handles general tourist cover in the German market. “Our impression is that many people tend to think that everything is covered by travel insurance, and when they submit a claim they are surprised that insured benefits were clearly defined and that coverage was not without restrictions. We try to keep the information as simple as possible and also mention the most common exclusions, but in the end there is an obligation for the customer to read at least the customer information sheet. On the other hand, insurers and providers still need to simplify wordings and put themselves in the shoes of a non-insurance expert. Many clauses – especially those about pre-existing conditions – reveal that insurers still do not speak the same language as their customers.”

Gillet says that he always urges his clients to read the benefits and the exclusions sheet – ‘not the rest of the smallprint, which is boring legal stuff’ –and if they do not understand a certain benefit or exclusion, he asks them to get back to him, so he can ‘translate’.

Gillet also says he sees a discrepancy between online customers buying insurance by themselves and those informed and insured by a language school or a cultural exchange organisation that has a group insurance agreement with his company. “This is reflected in the claims ratio,” he explained. “For exactly the same coverage, we have higher claims ratios and more denied claims with online business than with group insurance agreements.”

Dr-Walter runs articles on social media channels such as Facebook to explain why travel and health insurance – in the general tourist, student, expat and IPMI markets – is necessary, and why cancellation and curtailment cover is ‘very advisable’. It also arranges training sessions with students, their parents and the exchange organisations for which it provides group cover.


“We often feel that students ask us the wrong questions at the seminars we organise,” says Gillet. “For example, many students care about their smartphones and ask which coverage they should get for loss or theft, but they fail to understand that cover for medical insurance is much more important because a hospital stay abroad or a medical repatriation can easily cost many thousands of euros.” He says it is hard to measure the effectiveness of this training work for tourist travel, as the company does not monitor the claims in that sector, but in student insurance it has had a ‘good experience’ with at least some of the partners it trains. “I gave a presentation two years ago at a meeting of German exchange organisations. I focused on pre-existing conditions, mental illness and tricky exclusions. Whether my efforts have resulted in more awareness is hard to measure, but since then I feel our partners are asking more questions and thus have a better understanding of what is covered and what is not. I hope all this will result in fewer disputes and also in lower claim ratios, but there is still a long way to go from the customer side … and the provider’s.”

That ‘long way to go’ could be an understatement, as Gillet highlights the challenges posed not only by travellers who are not aware of the cover they have bought but also by those who simply don’t buy a policy in the first place. “It happens quite often that people – tourists and students – call us from abroad and tell us that they have not taken out insurance. This means that awareness before travelling is still low. Most of them say they learned about insurance only by telling other travellers about an illness or a hospital stay and being told they ought to have bought a policy!”

Consumer education initiatives

Most of the companies selling domestic and international cover in Australia are members of the ICA, which has a Travel Insurance Working Group andworks closely with DFAT, says Campbell Fuller, General Manager, Communications and Media Relations, at the industry body. “The ICA’s Communications Directorate communicates proactively with the public and the media on travel-related matters, from cancellations caused by volcanic eruptions to explaining why injured travellers might have had claims denied,” he told ITIJ. It operates the industry’s Understand Insurance financial literacy initiative, which assists consumers in making better-informed decisions about their insurance needs. For the past three years, Understand Insurance and DFAT’s Smartraveller programme have been partners in research that explores consumer understanding and purchase of travel insurance. In 2016, it focused on the travel behaviours of those aged 18 to 29; last year its target was Australians who take their holidays on cruise ships. This year, research examined Australians who travel to South-East Asia.

facts and myths

The Understand Insurance programme has started social and traditional media campaigns to encourage secondary school graduates – known as Schoolies – planning holidays in South-East Asia to take out the right travel insurance for their destination and intended activities, and to discourage them from riding motorbikes; an all-too-common cause of injury and claim denials.

Australians have a detailed A-to-Z website guide – including useful case histories – to travel insurance provided by Choice, an independent consumer advocacy group. In addition to the Australian Government’s Smartraveller website, there’s not only Know Risk, a website run by the Australian and New Zealand Institute of Insurance and Finance, but also Moneysmart – courtesy of the Australian Securities and Investments Commission – which features travel cover advice and information.

“It would be fair to say,” Murchie told ITIJ, “that the various initiatives have had a positive impact on consumer awareness about travel insurance. It is rare to come across a consumer these days who is not aware of the government’s Smartraveller website. The Australian general insurance Code of Practice requires that insurers who cannot offer cover must refer the consumer to another company that might be able to help, or to the ICA, which by proxy raises consumer awareness of the council and its initiatives.”

With a multicultural society, we should not overlook the potential of language barriers

She further explained that Go Insurance has recently introduced an educational blog series for consumers, and the click-through rates on travel insurance topics is ‘surprisingly high’. Topics range from legal principles of insurance and regulations to claim case studies, claims handling processes and general policy interpretation. This certainly suggests an appetite for information about how travel insurance works and what it covers.”

InsureandGo’s Etkin says his company has worked with industry organisations and government bodies such as the ICA, providing data to assist in framing educational messages that raise awareness of travel insurance. “We are also constantly creating and promoting content through our multiple marketing channels about the importance of travel insurance so travellers can understand it better. There is still room for improvement, but the industry has made effective improvements to the customer journey for purchasing travel insurance. For example, there has been a strong emphasis in the past six years on simplifying the process for travellers with pre-existing medical conditions.”

customer happy

Encouraging claims

Focusing on consumer awareness has paid off for Allianz Partners in the US, says the company’s external communications specialist Matt Popowski. “This is a topic to which we pay a lot of attention, and we’ve made great progress with some of our innovative approaches. Our goal is to pay as many claims as possible and minimise the number of denied claims. To achieve this, our customers need to fully understand their benefits and in which situations they will be covered, so they file a claim every time they are eligible for coverage.”

Popowski said the company’s efforts to improve customers’ understanding of insurance benefits and their satisfaction with them fall into two categories: increasing consumer awareness of benefits prior to purchase, and improving product benefits to include what customers want. Awareness barriers highlighted by Popowski include: customers who choose not to read their policies, leaving them unaware of their coverage and benefits; travellers who do not know what situations are covered by insurance; and consumers not understanding how to use travel cover.

Insurers still do not speak the same language as their customers

He elaborated to ITIJ about some of the ways Allianz has been tackling these issues: “We believe one of the best ways to help consumers understand the benefits of travel insurance is to design products that automatically compensate them for inconvenience when their travel is disrupted. We recently launched SmartBenefits to provide proactive claims payments when a customer’s flight is delayed. We actively track the customer’s flight status, and when a qualifying flight delay occurs, we immediately process a claim for them and send them an alert asking how they would like to receive payment.” The company’s free mobile app, TravelSmart, gives travellers access to their policy and benefits wherever they are. It enables customers to review and manage their policies, file a claim, check their claim status, and access 24/7 customer service and global assistance.

“In our Voice of the Customer (VoC) programme, we survey 30,000 customers every week to identify customer pain points and needs or potential gaps in coverage,” said Popowski. A team meets weekly to review the feedback, identifying issues as they occur and developing solutions. “One example of a VoC-driven product improvement is our expansion of benefits and coverage in cases of existing medical conditions (EMC). Customers believed they should be covered, so we added coverage eligibility requirements and by the end of 2018, nearly 100 per cent of our products included EMC benefits for trip cancellations and interruptions.”

people pyramid

Allianz customers also get email reminders days before their trips encouraging them to use their policy if a situation arises. The email includes a summary of their coverage benefits and limits in their policy. “One month after launching this through several eCommerce partners,” says Popowski, “we’ve seen an initial 11 to 12 per cent increase in customers’ comprehension of their benefits based on survey responses.”

Other innovations include: simplified policy descriptions; intelligent insurance offers using segmentation and AI/machine learning; full disclosures in the booking path; social media engagement; and an influencer programme. “In the past couple years,” said Popowski, “we have seen a significant increase in consumers’ understanding of our insurance benefits, with more specific questions that indicate an increasingly sophisticated knowledge of our products.”

Consumer responsibility

At the US Travel Insurance Association, Executive Director Megan Freedman suggests that while insurance providers do all they can to inform travellers, the buck ultimately stops with customers. She told ITIJ: “When purchasing a travel protection plan, travellers should be as specific as possible about their trip: where they’re going and what activities they’ll engage in. They should read their policy carefully to understand what is and isn’t covered and contact the insurance company directly if they’re unsure. Most companies offer a free look period that provides the customer with an appropriate amount of time to read, understand and adjust the policy if necessary. All providers have toll-free numbers in order to answer questions; they want their customers to be educated and purchase a plan appropriate for their situation. For example, are pre-existing medical conditions of the travellers or family members a concern? This is one of the most common reasons for claim denials, so the consumer needs to fully understand the purchase requirements in order to be properly protected.”

From a sales perspective, improving customer awareness could lead to better disclosure – on pre-existing medical conditions, for example – and thus increase the likelihood that the consumer obtains a policy that is suitable for their needs, says Murchie at Go Insurance. “Looking specifically at claims, increasing awareness could streamline the claims handling process. If consumers understand what documentary proof of loss providers require to assess claims, this can serve to expedite the claim process which in turn improves the customer experience.”

customer satisfaction

Improved awareness, adds Etkin at InsureandGo, gives travellers better knowledge of what kind of behaviour – and risks – might or might not void their policies. “By educating customers to better understand their policy, it helps to create a better relationship between the provider and the consumer when it comes to making a claim.”

Murchie agrees that the benefits to insurers from improving buyer awareness go beyond reducing complaints and disputes, and the costs of handling them. “Increasing awareness has the potential to improve the relationship between insurers and consumers. There are times when the industry is not held in high esteem; there’s a sense of mistrust, with some consumers believing insurers are always looking to rely upon the fine print to avoid claims. Most insurers genuinely look to pay claims, so a blanket assertion that insurance companies are dodgy is unfair. If consumers understand how insurance works and what is covered by their policy, this could result in them having reasonable and realistic expectations about how their chosen provider can help them in the event of loss.”