ITIC UK 2023 | Appearance vs reality: the role of technology in the UK travel insurance market

The ITIJ team have been reporting live from ITIC UK 2023 in Bath this week (20 April 2023) sharing the discussions that took place at the conference. Read all reports

In the final session of ITIC UK 2023, Chairman Ian Cameron introduced the panellists to discuss what role technology, in its variety of forms, plays in the travel insurance market of the UK, as well as the dangers to be aware of.

Gavin Dobson, Head of Propositions and Technology, Hood Group

Dobson started this session by focusing on how to engage with partners and customers and what technological trends are emerging.

He explained that technology is constantly changing; moving forward at an ever-increasing rate. He highlighted that no matter the size of the business, whether startup or large corporation, digital transformation should always be part of its business strategy. “Internally, digital innovation will continue forever,” said Dobson. He also explained that to keep up with the rate that technology is advancing, it is key to develop partnerships.

Dobson highlighted the problems within the landscape that need to be solved, such as onboarding technology that doesn’t meet your needs, wasting time and money. He also identified how to solve them – by leading with customer need and considering customer adoption prior to choosing the technology.

To fulfil the identified needs, technology partners need to be the right strategic fit. Once those partners are in place, this isn’t the end, said Dobson. Maintaining and engaging in relationships through clear communication, transparent processes and a security focus is essential.

To conclude, he looked towards technological advancements – such as parametrics, AI language models and super apps – as a way of preparing for the future.

Cameron asked whether, at Hood Group, they enable technology rather than technology enabling them. Dobson explained why having a customer focus and making them the starting point is essential, rather than having a tech-first approach, but he recognised that technology is needed to do what they need to do and to survive.

Sabine VanderLinden, CEO and Managing Partner of Alchemy Crew

Sabine VanderLinden started her presentation by examining the anticipated growth of the UK and global travel insurance markets, forecast to both grow to US$2.48 billion and US$68.18 billion, respectively.

She explained how this growth is being driven: firstly, due to the rapid growth of tourism, which factors such as media coverage, high disposable incomes and ease of online booking have contributed.

Secondly, the introduction and access to a global marketplace has allowed travellers to find and book reasonably- and moderately-priced accommodation. More platforms are being built to meet the needs and wishes of travellers, therefore travel insurance needs to be a consideration.

Finally, travel insurance is mandatory in some markets – USA, UAE, Russia and the Schengen zone – which has led to increased sales.

After identifying the drivers for growth, VanderLinden explained where revenue is generated. She said that 60 per cent comes from single-trip insurance coverage, with a particular demand for sports activities coverage in insurance packages; 35 per cent is generated by insurance companies as trusted distribution sources; and 28 per cent is the senior citizens’ expenditure.

Looking to the future, VanderLinden identified three areas offering opportunities for the sector: pleasure, particularly revenge travel post-pandemic; business, thanks to the rise in hybrid working, and bleisure; and sustainability.[JA1] 

Technology is the link between all three, highlighted VanderLinden, offering the chance to build new business models. Combining these three niches could be a game-changer. The four notable opportunities are:

• Mobile and cloud computing
• Artificial intelligence
• Blockchain and digital wallets
• Autonomous ride hailing.

Additionally, VanderLinden showed five approaches to enhance travel protection. Niche insurance, on-demand insurance, parametric insurance, embedded insurance, and De-Fi insurance.

To conclude, she looked at what insurers must do: enhance customer experiences by maintaining a human element in the relationship and adapt to regulatory changes, making them transparent for the customer.

Elizabeth Mulley, Senior Associate, Trowers and Hamlins

The final speaker of this session, Elizabeth Mulley, focused on the problems that digitalisation of the travel insurance market can cause.

She identified the consequences of technology in the sector: a significant amount of very valuable data, such as medical information; digital systems and home working, which has grown post-pandemic; and cybercrime.

Mulley focused on two key issues: sharing and using customer data, and hacks and ransomware attacks.

About the former, she explained that data protection and usage practice is under much greater scrutiny from customers. Also, that the risk of data breaches has increased because insurers are desirable targets, as they hold valuable data, which could result in considerable fines, as well as a loss of customer loyalty and reputation.

She quoted the Information Commissioner’s Office (ICO) saying that the biggest cyber risk is complacency. To prevent data breaches, she suggested risk assessments, secure access to data, reducing third party risks, encryption, and awareness and training.

Regarding hacks and ransomware attacks, Mulley explained that the risks for businesses are financial, operational, regulatory and reputational, as well as potentially facing a large number of claims – especially if there is a group action. For smaller businesses, it could mean they close down completely.

Mulley suggested following a cyber response plan – including road-testing and updating it, having legal, public relations and cybersecurity experts on hand – and responding quickly, reporting to the ICO within 72 hours.

However, the best thing is to prevent these attacks in the first place through technology, training, a cyber response plan, and risk assessments.

Cyber insurance should form a part of the response, emphasised Mulley, but it shouldn’t be the sole strategy to rely on; prevention measures need to be used alongside.

The bottom line, according to Mulley, is to prepare and prioritise cyber security at all levels in the business.

Concluding the session, Cameron asked the panel: “Shouldn’t we be cautious with how far we go with technology?”

VanderLinden said that we need to slow down but only some companies will, others won’t, which will leave a gap. To bridge this gap, she recommended having a human in the loop so we are educated on the technology and not surpassed by it.

Mulley said that unfortunately there is always someone trying to exploit what has been built, true of the digital world too.

Dobson’s advice was to still be bold and try new things, as this is the only way you can find solutions to modern digital problems that arise – if the problems are unknown, they can’t be fixed.