How can travel insurance providers lower their loss ratio while increasing customer satisfaction?
There is no doubt that travel insurance can claim a prime spot among the industries most impacted by the COVID-19. On the one hand, insurers have had to deal with an all-time high number of claims, resulting in hundreds of millions of dollars in cancellation and disruption payments to customers. On the other hand, the massive slowdown in international travel has resulted in the plummeting of travel insurance policy sales.
However, there are grounds for optimism. Nearly all experts agree that travel will eventually pick up. James Asquith, Forbes’ travel writer, notes that other disruptions like the SARS outbreak and the 2010 eruption of the Eyjafjallajökull volcano in Iceland didn’t prevent the speedy recovery of the industry. He comments that:
“in 2010, 20 European countries closed their airspace for nearly three months but passenger demand was able to bounce back sharply after.”
Travel operators are already reporting bookings for later this year. A survey conducted by BCG, the US management consulting firm, showed that 69% of US consumers stated they “can’t wait to start travelling again”, and 36% said they can already envisage going on a vacation this summer.
So, although the global travel insurance market has assuredly taken a big hit in 2020, its prospects are bright. In fact, a report by Global Info Research estimates that travel insurance premium revenue will rebound relatively quickly and is expected to overtake 2019 revenue by 2022.