New technologies such as machine learning, blockchain and artificial intelligence are ushering the travel insurance industry into the 21st Century. The advent of these technological advances is modernising the industry; expediting processes, improving customer service and retention and breathing fresh air into somewhat archaic procedures, with tangible benefits aplenty for policyholders and insurers alike.
There is no denying that we are creatures of comfort and convenience and, for consumers, the ability to purchase travel insurance via an app or make a claim at the touch of a button, all with support available every step of the way from a friendly and knowledgeable chatbot, makes life easier. In fact, you could say that travel insurance is becoming a more attractive and exciting product thanks to technological advances in the industry.
So, what are some of the key advances emerging in the sector, how are they transforming travel insurance, and what impact are they having on industry professionals and consumers?
Travel insurers won’t be known for being travel insurers; they will have to provide more than just insurance
Talkin' bout a revolution
Insurtech startup Setoo strives to transform cumbersome and complex insurance processes and operations into simple micro products that match a specific individual’s needs. Eyal Gluska, Co-Founder and Co-CEO, said that, thanks to technological developments, it is no longer just insurers that can provide insurance. “Smart analytics, machine learning and AI have made it possible to create fully automated parametric insurance products, which include real-time pricing, one-click underwriting and automatic compensation. But the truly revolutionary application of this technology means it’s no longer just insurers that can provide insurance,” he told ITIJ. “Airlines and online travel agencies can use these technologies to develop and distribute their own protection products, delivering their consumers an improved level of service, which opens up new possibilities for ancillary revenue in an industry where it matters more than most.”
Rajeev Shrivastava, CEO and Founder of VisitorsCoverage, has also been on the front row of digital transformation in the industry, and believes it’s about time, too: “The travel insurance industry as a whole has been late to the technology revolution, largely because it is such a highly regulated industry that varies by states, provinces and countries. This business is over a century old, with lots of legacy systems, traditional mindsets, policy regulations and business models. They cannot all be changed at once.”
As Shrivastava pointed out, many industry processes are deeply entrenched, and it takes time to introduce and implement new ways of doing things. But he believes travel insurance is catching up. “The industry has made up for lost time through innovations in online search and comparison tools that simplify complex policy selections,” he told ITIJ. “Insurtech’s influence is everywhere – from purchasing car insurance to renters’ insurance to health insurance.”
VisitorsCoverage, a US-based insurtech company that is working to disrupt the global travel insurance industry by leveraging technology, is capitalising on technologies such as AI and machine learning, as Shrivastava explained: “These technical tools are now a huge part of customer education and the overall decision-making process for the travel insurance buyer. We utilise this technological innovation to improve the customer experience, starting with education to inform the decision-making process and empower the user to manage their policy quickly and easily online.”
Simplicity from complexity
Essentially, travel insurance is thought of by some consumers as a complicated product that can be rather convoluted. As such, technologies that are able to simplify any step of the purchasing process and have the potential to make life simpler for the consumer are sure-fire winners.
In line with such thinking, Shift Technology strongly believes in the potential of AI to unlock the future of insurance. The company works to create AI-native solutions that can help insurers to deliver amazing customer experiences. Estelle Lebar, the company’s Global Offering Leader, Travel Insurance & Assistance, explains. “Consumers have shown repeatedly that the convenience of the ‘on-demand’ economy – ecommerce, ride sharing, food delivery, and so forth – is what they want from the majority of businesses with which they interact. Insurance carriers, especially travel insurers, are not immune to this trend,” she told ITIJ. “The easier travel insurers can make the entire policy lifecycle – from purchase through claims – the more likely consumers will be to think of travel insurance as something to simply ‘add on’ to their plans.”
Shrivastava agrees that convenience is key to customer attraction and retention. He believes that ensuring customer loyalty can be tricky for travel insurers, but that it is increasingly possible, thanks to technology. “Unlike home and auto insurance, which are subscription-based and sometimes required by law, travel insurance is purchased on an ‘as needed’ basis, making customer retention and loyalty particularly challenging,” he explained to ITIJ. “This is why user experience and ease of use is more important than ever, as a simple and hassle-free online experience will leave an impression and encourage customers to return the next time they need travel insurance. Technology is at the centre of customer engagement, education and experience.”
One size fits none?
Consumers will be able to buy insurance as part of their purchase journey in the same manner as any other online product; meaning they will actually want to buy it, rather than feel obligated to do so out of fear
In addition to convenience, something that consumers prize highly is a product that is suited to their individual needs, and customisation is, again, an area in which technology is assisting.
“Technologies such as machine learning that draw on customer data empower the design of parametric insurance products highly tailored to the needs of individuals,” stated Gluska. “This represents a shift away from the standard one-size-fits-all products to those that insure against risks associated with the specific activity being undertaken, whether that’s no snow on a skiing trip in Switzerland or rain on a sunbathing holiday in Spain. Travel providers can use these technologies to make their products more relevant, and therefore more appealing, to their consumers, encouraging repeat purchases for future trips.”
ITIJ also spoke with Alex Rainey, CEO and Co-Founder of Pluto Travel, which provides ‘hassle-free’ travel insurance through a smartphone. The product is pitched as ‘travel insurance for people who don’t like insurance’. Rainey pointed out that while technological developments are exciting, they are not necessarily what the consumer wants; more so, they want the result of the technology, whether that be a speedier claims process or extra support via a chatbot. “There is almost an abundance of new technologies for insurers to play with but it’s always worth remembering that customers aren’t looking for a certain technology and that’s the thing that will enable them to stay loyal for longer. They’re not asking for chatbots, they’re asking for better support; they’re not asking for AI, they’re asking for quicker claims. If technology can help to solve some of the real problems and enable customers to do more of what they want, this is where loyalty can be earned. Customers buy insurance for peace of mind, protection and confidence.”
Loyalty is royalty
When it comes to consumer loyalty, technology certainly plays a role, whether obviously or inadvertently. One of the ways in which it can help to improve customer retention is by simplifying things, as Gluska explained: “Technologies such as machine learning can be used to monitor external data sources, such as a weather website, and provide compensation to consumers automatically in response to the forecast. If consumers receive an option to cancel their camping trip in response to a forecast for rain and automatically get a full refund – no claims required – they are likely to have a much better experience than if they had to go through the hassle of a manual claims process.”
Lebar sees this too and believes that a positive policy purchasing process can act as positive reinforcement and make consumers more likely to return to the same insurer: “Travel insurance is often offered as an option when you book travel and each aggregator, airline, and the like, has a partnership with a specific carrier. So, you purchase a travel insurance policy and unfortunately need to make a claim. The good news is the claim was handled efficiently and settled fairly. Maybe the whole process was automated, and the claim was settled in minutes – fully online. Because of the positive experience, for your next trip you decide to purchase a travel policy. But instead of going with the carrier affiliated with whomever you’re booking the travel, you seek out the carrier with whom you had a great customer experience. This one-way digital transformation may continue to reshape the travel insurance industry.”
A rocky path
What of the challenges that are inextricably linked to the rise of technology in the travel insurance sector? Setoo’s Gluska pointed out that the level of regulation entrenched in the industry can be problematic, along with the constantly shifting nature of the sector. “The travel industry is constantly evolving; low-cost players changing the rules, business models depending more and more on ancillary revenue, and millennial consumers expecting high-quality travel experiences. On top of that, insurance is a highly regulated industry with significant variations in the rules from country-to-country. Combine all this with strict data privacy laws such as GDPR, creating innovative and compliant insurance products can be a challenge,” he told ITIJ.
For Lebar, the primary problem is related to fraud. “If we look at this simply from the perspective of greater automation, the one big challenge will be how do you mitigate the risk of fraud?” she underlined. “Unfortunately, the insurance industry has already seen that introducing greater automation into the insurance claims process increases the potential for fraud by up to 300 per cent. To be really successful, insurers must implement effective fraud detection and mitigation strategies as the foundation for their digital transformation initiatives.”
Technological advances are not only making travel insurance more attractive, they are also matching products to individual needs
Another challenge linked to the uptake of technology in travel insurance relates to the importance of consumer education. The travel insurer has a responsibility to ensure that the consumer is suitably informed about new options and resources available to them. “Technology does not necessarily solve problems for travel insurance the same way it might for another product or industry,” stated Shrivastava of VisitorsCoverage. “Travel insurance industry regulations limit how technology can be used to improve the overall experience for the customer. Providers need to strike a balance between delivering necessary information and using technology to recommend benefit and policy options.”
Travel insurance is still a complex topic with many moving parts, he said: “Simplify it too much and you run the risk of travellers purchasing the wrong coverage, which could lead to financial burden and liabilities for both the customer and the company. Fail to simplify the process enough, it’s too confusing for the customer and they find another place to purchase.”
The future of online travel insurance purchasing is exceedingly bright for the travel insurance industry
The customer is correct – always
Despite the convenience that technology affords consumers, there is indeed still an underlying issue associated with a lack of understanding of the importance of the product. However, technology has the potential to assuage this, as Pluto Travel’s Rainey highlighted: “New technology doesn’t solve the main cause of people not buying and engaging with their travel insurance. People don’t always fully understand travel insurance and they don’t know if they need it, or don’t think they need it because the risk feels low. Technology can play some part in this; it can enable customers to have more choice and flexibility with the insurance they’re buying. It can give them peace of mind that if something does go wrong, they will be supported quickly and efficiently. And finally, if technology can enable additional services to help people get the most out of their holiday ─ then they may just engage with it more.”
For Rainey, the starting point should always relate to understanding what consumers are trying to achieve. “The product and technology can then follow where appropriate to enable this,” he said. “We see too many insurers and innovation hubs launching new proof of concepts and pilots where the technology is the focus, that’s what is being proven – we strongly think this is the wrong way round and the industry can be better served by taking a step back and understanding what they are really trying to achieve.”
We are all familiar with the saying ‘the customer is always right’ and this is at the heart of this mentality – travel insurers need to educate consumers appropriately and assistance should be available to consumers at every leg of the travel insurance purchasing journey.
With technological advancements continuing apace and consumers beginning to better understand the true value of travel insurance, what does the future of the industry look like? Setoo’s Gluska believes that travel insurance as a product will become more and more appetising to consumers. “Consumers will be able to buy insurance as part of their purchase journey in the same manner as any other online product; meaning they will actually want to buy it, rather than feel obligated to do so out of fear. Furthermore, they will be able to tailor their travel insurance with bundles that are relevant to their individual needs and concerns,” he predicted.
Technological advances are not only making travel insurance more attractive, they are also matching products to individual needs. “It’s through ever-more advanced analytics, machine learning and AI that travel providers can increasingly make their products relevant and appealing to each individual consumer,” Gluska surmised.
Shift Technology’s Lebar believes it’s an exciting time for the industry. “We’re going to see continued evolution in how potential policyholders interact with insurers. Those that adopt greater ‘on-demand’ sensibilities – and invest in the right strategies and technologies to support them – will clearly be the most successful. In that group, we’ll see fairly simple claims, such as lost or damaged luggage and delayed or cancelled flights, settled quickly and fairly without human intervention. This will free claims handlers to focus on more complex claims, for example medical emergencies, that require a human touch. All in all, we’re going to see a greater focus on delivering an exceptional customer experience supported by technology at every stage of the interaction,” she told ITIJ.
Technology has practically limitless potential to encourage interest and engagement in the travel insurance industry
Shrivastava also sees good things ahead: “The future of online travel insurance purchasing is exceedingly bright for the travel insurance industry. Not only are annual and quarterly policies becoming the norm for business travellers and frequent travellers, mandatory travel coverage is being explored and implemented in a handful of countries, which signals a huge policy change for debt-strapped national healthcare systems across the globe,” he said.
As for Rainey, change is surely coming: “The future of travel insurance, I think and I hope, will look very different from what we have today. Retail banking can give us a glimpse of how companies that didn’t exist three to five years ago are now dominating new accounts creation, satisfaction scores, and everyone else is playing feature catch-up. I view travel insurance and most insurance in a similar way; I think the future holds new providers that aren’t around today or are just starting out. I think the future holds new business models that work with a customer’s travel habits and desires; a lot of this will be enabled by new tech, but also through design, a shifted view of how to best serve the customer. And finally, travel insurers won’t be known for being travel insurers, they will have to provide more than just insurance. If a customer wants to maximise their holiday time and experience then there is so much more insurers can do to support this.”
One side of travel insurance, please
Looking ahead, it seems like travel insurance will be more and more revered as an invaluable product thanks to consumer education and advances in technology in the sector. Technology can help create customised products for consumers. We all know by now that one-size-fits-all simply doesn’t fly and customers desire a product that meets their individual needs. There are challenges associated with an uptick in technology, such as integrating new technology with legacy systems, heightened fraud risk associated with increased automation, and challenges inherent to the complexity of travel insurance. But these can be mitigated with effective fraud detection strategies.
Above all, the rise of technology in the sector needs to be managed mindfully and correctly, with the consumer always at the heart of every decision made. As Shrivastava astutely observes, technology has endless potential, but this must be harnessed carefully: “Technology has practically limitless potential to encourage interest and engagement in the travel insurance industry, but it’s up to travel insurance companies to listen, innovate and harness the power of AI, data science and machine learning to deliver a seamless, personalised travel insurance experience for every traveller. Currently, the consumer wants more convenience than the travel insurance industry can offer, but with input and participation from all the necessary stakeholders, like the Department of Insurance, underwriters, administrators, providers and consumers, the sky’s the limit for tech and travel insurance.”