Perfect partnerships?
Affinity deals and white label schemes are as popular as ever in the global travel insurance industry. Robin Gauldie considers whether the enthusiasm for such arrangements is nearing its shelf life or whether it’s about to step up a notch
Affinity deals and white label schemes are as popular as ever in the global travel insurance industry. Robin Gauldie considers whether the enthusiasm for such arrangements is nearing its shelf life or whether it’s about to step up a notch
For affinity scheme partners, the benefi ts of working together are obvious: the insurance company opens up a new sales channel, allowing clients to buy its products at the same time as booking a flight, a rental car, a cruise, or even when buying their groceries; while the travel – or other – industry provider gets additional earnings and adds value to its product range with a minimum of hassle. Such arrangements between insurers and the likes of supermarkets, travel agents and airlines have been popular for many years, but it’s as important as ever to make sure all parties work together to get it right. “Nowadays, affinity deals account for the vast majority of travel insurance sales,” says Rob Upton, director of sales and marketing at CEGA Group, a UK provider of claims management and emergency medical assistance.” Often, he says, the policy is sold by one company, underwritten by another and serviced by a third, so it is essential that the policyholder receives an entirely seamless service. “Done well, the customer is none the wiser and benefi ts from a powerful combination of organisations that are experts in their particular field,” Upton says.
Popular approach
If there was ever any doubt that affinity partnerships in the travel insurance industry were in decline, further evidence of their ever-lasting – if not increasing – popularity is evident by a swift glance at the current global market, where affinity partnerships such as those between British Airways and Preferential Direct, Hertz and Allianz Global Assistance, and Royal Caribbean and Holiday Extras abound. Even just this year, a plethora of new affinity deals have been struck in different parts of the world. In June, Malaysian insurer Tune Insurance announced a tie-in with Philippines airline Cebu Air to sell its insurance policies. The deal caused one regional financial consultancy in Southeast Asia, CIMB Research, to raise its growth forecast for Tune from 15 per cent for the financial years 2013-15 to 16 per cent this year, and 18 per cent for the 2014-15 financial year.
Nowadays, affinity deals account for the vast majority of travel insurance sales
In the Asian market, where low-cost carriers are expanding and travel insurance penetration is low, companies like Tune Insurance see an opportunity to grow their business through deals with these start-up airlines. In November last year, Citilink Indonesia, the low-cost subsidiary of flag-carrier Garuda, launched a deal with Chartis Insurance Indonesia to provide a travel insurance solution branded as Citilink Shield, a rebrand of the insurer’s Chartis Travel Guard product. Arif Wibowo, Citilink’s chief executive officer, said the deal would add value for passengers. However, this is a stripped-down product. Premiums start at 18,000 Indonesian rupaiyah (US$1 =11,000 IDR) and benefits include compensation for delayed flights up to IDR450,000 per hour and lost or damaged luggage cover of up to IDR5,500,000. Citilink Shield also provides coverage against illness, accident, and flight cancellation. For travellers on return flights, coverage extends from flight check-in until return. One way travellers are covered from airport to airport.
Even established carriers are continuing their tie-ups with insurance partners, though, and reaping the benefits. In October, it was revealed that an affinity deal between Malaysia Airlines and Cover-More Insurance in Australia had created ‘unprecedented growth in ancillary revenue’. Cover-More, together with Malaysian insurer Etiqa, won a five-year contract to provide travel insurance for the airline last year, and since that time, the airline’s revenue has increased in line with its passenger numbers – which grew 29 per cent in the first six months of this year. Meanwhile, Allianz Global Assistance USA has been among the more active insurers in seeking to grow sales through affinity contracts. In June, Allianz inked a partnership with Hawaiian Airlines to integrate its Fusion platform to generate targeted travel insurance to passengers in Hawaiian’s reservation path. And in May, Allianz agreed a deal with Kayak, a global travel search company, to sell its policies to Kayak’s customers. Crucially for the online travel search sector, in which those buying travel or accommodation are often not protected by compensation mechanisms provided by state or travel industry bodies, Allianz’s policies for Kayak clients reimburse non-refundable travel costs when a trip is cancelled for a covered reason. They also provide travel assistance for medical and other emergencies. ITIJ spoke to Lee Taylor, chief sales officer at Allianz Global Assistance UK, about the company’s approach to white label deals. He said: “White labelling is often part of a wider distribution agreement, whereby we may also sell via the clients’ booking channel, [so] the white label solution forms part of a wider distribution strategy. As such, it forms part of a wider customer proposition agreed between the insurer and client.”
Allianz Global Assistance Australia, meanwhile, agreed a five-year deal at the end of 2012 with STA Travel to underwrite all travel insurance sold in STA’s outlets in Australia and New Zealand. It already has affinity agreements with the airline Virgin Asutralia, and with an Australian travel agency consortium, Travellers Choice, amongst others. In the UK, Allianz Global Assistance has partnered with easyJet to sell its policies to the low-cost airline’s passengers – a development that easyJet flagged up with seat-back adverts onboard in what Greg O’Gorman, the airline’s head of partner marketing, says was ‘an awareness-raiser to let customers know that the product was on the market’.
it is essential that the policyholder receives an entirely seamless service
The airline also worked hard with the insurer to tailor the product to its audience. Easyjet’s purpose-built policy from Allianz addresses a common complaint among passengers on low-cost airlines regarding heavy penalties imposed for missed flights or changes to flight arrangements by providing what O’Gorman calls a ‘no-quibble refund and free-of-charge transfer to the next available flight’ for insureds who cancel for any reason. The only proviso, he claims, is that the passenger must turn up at the airport no more than four hours after the flight has departed. This is not, he says, an off-the-peg product. “It is a bespoke policy. We have a cancellation cover, but also personal and medical cover.” Taylor commented that the deals inked between Allianz and airlines are very important to the company: “The travel market is a diverse and vibrant area, therefore other routes to market – whether direct, web or through travel operators – are also essential.”
Another recent UK-based insurer–airline affinity partnership involves a three-year contract between UK General and Ryanair, announced in 2011, whereby travel insurance is sold on a pan-European basis across 22 European Union (EU) countries. The deal enables Ryanair to sell travel insurance through its website booking process, call centre and dedicated travel insurance website to passengers across the EU. UK General called the scheme, which was developed from each area of the company’s business, ‘complex and ground-breaking’.
Word of warning
While many insurers and their travel industry partners are quite rightly upbeat about the concept of affinity schemes, there are those who offer words of caution about customer confusion, mis-selling, and how well each party in the affinity scheme shares its areas of knowledge and expertise to ensure a smooth customer experience. Customer confusion often arises when the traveller purchases a policy from – for example – an airline’s website, but via an insurance seller/administrator, who is actually selling a product from a separate insurer, who is providing a product that is underwritten by yet another entity. So, the buyer of the ‘white label’ policy may not be clear that the policy is written not by the travel provider/supermarket/car hire firm, but by a separate travel insurance company. Sometimes, prominent branding by an airline, a bank or a supermarket selling travel insurance, further buries mention of the insurance company in the small print.
“There can be a little bit of confusion among customers about what products are offered by easyJet Direct,” confirmed Greg O’Gorman. “We have taken a different approach now. All passengers now see a number of follow-up emails – for example, with car rental, we have now put in two email messages, including a reminder 48 hours before departure, which reminds the client of the need for insurance and refer them directly to the co-branded white label provider.” Transparency and clear questioning, then, are essential for those writing and selling affinity products. According to Roman Bryl – formerly in AXA Insurance’s travel department and now AXA’s product manager, motor, direct and partnerships – this is the key to a successful white label partnership: “It depends on the quality of the base white label website product,” Bryl says. “Are the application questions asked in a clear and unambiguous manner? Is the website clear and easy to navigate? Is it clear to customers what they are buying and are the features, benefits and exclusions clear?” With affinity products it is important to make sure that it is clear to potential buyers whether the white label policy provides cover for pre-existing medical conditions, sports and activities, cancellation and travel disruption cover, and reasonable policy excess options.
transparency is the key to a successful white label partnership
Concerns have also been raised about the misselling of affinity products, especially when a policy is sold by someone who is not an insurance expert. Tracy H. Simons, president of US company Custom Assurance Placements, cautions that white label insurance has its attendant risks for vendors as well as clients: “People that typically promote this insurance are the people selling the trip. Sure, they may have a good insurance company and adequate benefits, but they also get paid for the sale of the product and insurance is not their specialty,” Simons says. She cites the recent case of an injured cruise ship passenger who was disembarked and sent for care at the closest medical facility in Turkey. “The care that was given did not go well and the facility was not the most qualified to handle the patient. The outcome was not favorable for the traveller. Ironically, there are many JCI accredited facilities in Turkey with top rankings, but the need to ‘unload’ the patient and the lack of knowledge sent the patient to a facility that may not have been properly qualified.”
Cruise lines, Simons points out, are not medical providers, and do not specialise in medical care or managing it. “Let’s face it,” she says, “when they have an injured or ill passenger they, of course, want to make sure they are safe, but their top priority is probably to get them to a nearby medical facility and defer the responsibility of the wellbeing of the passenger to someone else. They need to move their other passengers to the next port of call. They don’t have the expertise, time or knowledge to pick the best facility for the patient.” Medical assistance and the handling of travel insurance customers, then, needs to be in the hands of those who know their industry. That was one factor in the (now defunct) UK Financial Services Authority’s (FSA) decision six years ago to place limitations on British travel agents selling travel insurance. The FSA argued that travel insurance was better sold by specialist insurers, and that many travel agents lacked the expertise to make sure their clients bought the right policy. The move was a blow to high street travel agents, depriving them of a valuable source of revenue, and it also deprived travel insurers of a useful sales outlet. British travel agents now need to be authorised by the FSA’s successor body, the Financial Conduct Authority (FCA), or be appointed as a representative of an authorised insurance firm, before they can sell or advise on travel insurance. Without such approval, all they are permitted to do is give general advice. Regulation also blocks unauthorised agents from selling a holiday that includes non-optional insurance, and this may mean that, unless you’re authorised, you may not sell that holiday. Insurers are confident, however, that their affinity partners have the necessary knowledge to sell their policies, and say they have systems in place to assess sales and distribution matters. As Taylor commented to ITIJ: “As an FCA and PRA regulated entity, Allianz Global Assistance UK takes its responsibilities to ensure products are not only fit for purpose, but also relevant to the end user, very seriously. Our compliance department works with our respective partners to ensure that our channels are meeting the requirements expected and are reviewed on an ongoing basis.”
Medical assistance and the handling of travel insurance customers, then, needs to be in the hands of those who know their industry
Simons, meanwhile, credits some travel agencies in the US with pro-actively certifying their agents in specific types of travel arrangements, such as medical tourism, and seeking out the types of insurance needed for these trips: “For example, Well-Being Travel is working with us to develop a policy that will offer credentialed facilities to insureds. This is both for the pleasure traveller and the medical tourist. The coverage is important but you need to make sure you have the right policy with the right credentialing of facilities when you really need it, at claim time.” Thus, at the claims stage, affinity products have to be managed very carefully. “Effective claims management is a vital part of this unified service, and fault lines can be exposed if a white label policy is ill managed at the claims stage,” warns Upton. To achieve effective claims management, he says, companies offering such services should work with the partner to ensure it projects not just the company name, but also its brand values, philosophies and standards – onto every aspect of its customer relations; from first-call response to final settlement. Upton says this brand immersion gives the customer a unified, positive experience that can encourage brand loyalty and aid retention. “Delivering this level of integration is a complex process that calls for a claim provider’s ability to unite skills in technology, telephony, training, marketing and client management,” he concludes. Affinity schemes may come to dominate the mainstream travel insurance sector, but it is clear that selling the right policy to the right person and delivering seamless service will be essential to their continued success. These are challenges that insurers and their industry partners are working hard to meet while at the same time building strong partnership ethics. Says Lee Taylor of Allianz Global Assistance UK, the keys to a successful white label partnership are as follows: “Both businesses need to have an open and trust-built approach whilst never being afraid to challenge the status quo. If this is combined with ensuring there is a true value to end user that enhances the client’s proposition, then a long-term and successful partnership can be achieved.”