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Most of us want nothing more than to see landscapes other than our house and the shop next door, to get out of the city for a bit, to renew our energies. We will all need a holiday when we finally come out of this crisis – preferably somewhere remote and far away.
Travel, after all, is good for the soul. And while there may be a lot of uncertainty as to when and how the various lockdowns and restrictions in place will be lifted, experts all agree: there is pent-up demand for travel. We can expect to see a rapid rise in reservations for remote destinations once limits are removed. In fact, online travel agencies such as Skyscanner are already reporting bookings for late 2020 fights.
That being said, traveling post-Covid-19 is likely to be quite different to what we were used to. First, we will all be taking more precautions to stay healthy and safe, and to cover for all eventualities. Intelligent health and travel solutions will play a key role in this respect. Second, the sector is currently taking a huge economic blow – and so it is hard to know which actors will survive, and which ones will not make it at all.
Travel insurance can certainly claim a prime spot among the industries that are taking a particularly large hit due to the Covid-19 crisis. The Association of British Insurers (ABI) expects travel insurers to receive 400,000 Covid-19-related claims, resulting in £275 million in cancellation and disruption payments to customers – almost twice as much as the previous record of £148m back in 2010. To date, more than 30 insurers have temporarily stopped selling travel insurance, and a further 19 have altered their policies to exclude coronavirus-related claims as well as future pandemics.
Yet the future might not be so bleak for insurance companies.
Firstly, because we expect to see a general increase in appetite for travel insurance. We are all used to airplane bookings coming with tens of add-ons once we have selected our chosen flights. Most of us skip ahead past speedy boarding, extra baggage, car rental and even seat selection. But one box we will no longer be skipping is the one asking us if we want to insure our flight or purchase health insurance. We will be particularly wary of having our holiday plans cancelled or of experiencing health problems abroad without appropriate medical coverage.
Secondly, because we anticipate seeing a significant change in the coverage offered by travel insurance. Basic policies will probably no longer include pandemics-related events. Similarly, insurers will exercise caution when selling Cancel for Any Reasons policies – so these will almost certainly retail at a higher price than prior to the Covid-19 crisis. Most of us will readily pay substantial riders to include such features to our basic coverage – meaning extra revenue to insurers.
Where does this leave travel insurers? On the one hand, dealing with the biggest blow ever experienced in the industry. On the other, with a likely increase in revenue once travel picks up again. What is certain
is that they will need to innovate to cater to our needs when traveling – we will expect our insurance to provide us with unprecedented flexibility and safety. But they will also want to find solutions that can impact their bottom line and differentiate their offerings from that of competitors.
We will be especially attentive to staying healthy while travelling and will expect easy access to excellent medical care should the need arise. Insurers should start using services enabling sick or injured travelers to seek help from a network of qualified and vetted medical professionals who speak their language without necessarily having to visit the ER. This has the benefit of increasing quality of care while reducing the expense born by the insurance company – shifting from high-cost hospitals to low-cost yet qualitative private care.
At Air Doctor, we tested this model with the Phoenix Insurance company, with stellar results. Overall, we observed an 30% increase in traveler’s health insurance revenues coupled with a 14% reduction in medical visits claim costs. The numbers speak for themselves: integrating such services can be a game changer for travel insurers.
Covid-19 brought the world of travel insurance on the edge of change. Time for insurers to adapt and thrive.