‘Digitisation’ and ‘modernisation’ are two of the most common buzzwords circulating around the global insurance industry. This is due, in large part, to the simple fact that consumers have shown repeatedly that the convenience of the ‘on-demand’ economy – e-commerce, ride sharing, food delivery and so on – is what they want from the majority of businesses with which they interact.
Insurance carriers, especially travel insurers, are not immune to this trend. The easier travel insurers can make the entire policy lifecycle – from purchase through to claims – the more likely consumers will be to think of travel insurance as something to simply ‘add on’ to their plans.
At the same time, we can make a valid argument that the travel insurance industry is already ahead of the digitisation trend. Long before the advent of ‘digital native’ insurers serving other lines of business, travel insurance had already gone digital. With so many consumers booking travel online – either via aggregator sites or directly with the airlines, cruise lines, train lines and so on – it only made sense to be able to buy a travel policy at the same time. Consumers were already interacting with travel insurance providers in much the same way they interacted with e-commerce companies, rideshare platforms and other digital businesses.
Yet, travel insurers must continue to fully embrace their position in the digital economy and ensure that not only can consumers purchase a policy quickly and easily online, but also manage that policy and any resulting claims in the same manner. This is the next big opportunity for modernisation in the travel insurance space.
Many forward-thinking insurers view automation as a key element in delivering an exceptional customer experience and winning customers for life
Pros and cons
But what real benefits do carriers reap by fully embracing automation throughout the policy lifecycle? Many forward-thinking insurers view automation as a key element in delivering an exceptional customer experience and winning customers for life. This is an interesting proposition for travel insurers because their coverage, by its very nature, is temporary. As a traveller, you purchase a policy to cover a specific trip over a limited time period. This is the exact opposite of what most would consider a customer retention strategy. Perhaps then, the way to think about the customer experience for travel policies is not from a customer retention perspective, but rather a customer loyalty perspective. In most situations, travel insurance is offered to customers as an option when they book their trip. Each aggregator, airline, or other provider has a partnership with a specific carrier. As the customer nears the end of the transaction, a travel policy is offered. The policy is underwritten, and the total sale is completed.
Now, what happens if a mishap occurs and the policyholder needs to make a claim? Let’s make some assumptions here. In our scenario, the good news is that the claim was handled efficiently and settled fairly. We’ll also say the whole process was automated, and the claim was settled in minutes – fully online. Because of the positive experience, for the customer’s next trip they decide to purchase a travel policy. But instead of going with the carrier affiliated with whichever site they’re using to book their travel, they seek out the carrier with which they had a great customer experience. This is only one small way digital transformation may continue to reshape the travel insurance industry.
Naturally, if automation were this simple, everyone would be doing it. So, what are some of the potential pitfalls that may come from an automation strategy? One of the biggest challenges will be how to mitigate the risk of fraud. 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.
We can make a valid argument that the travel insurance industry is already ahead of the digitisation trend
It’s an exciting time for both insurers and the insurtech providers that are helping them transform their businesses. 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. ■