As Chairman of the Association of Travel Insurance Intermediaries (ATII), I was recently asked to present an outlook on the travel insurance market for 2012. Below is a brief look at some of the challenges and opportunities that I believe we will face this year.
Despite the economic climate, 10% of 55-64 year olds, an age bracket considered as ‘higher-risk’ for insurance purposes, took over 4 trips abroad last year, raising the risk of poor Annual Travel performance as younger age groups travel less and move to single trip purchases.
The high street has also seen a surprising growth in bookings, up from 17% to 25%. ABTA believes this is fuelled by the 15-24 age group, giving an opportunity for the high street to re-invent itself by using social media and other technology to build trust and enhance the travel agent experience.
Additionally, there has been growth in investment of mobile booking platforms. Travel companies and investors are both looking at mobile so insurance companies need to consider getting up to date and ensuring they remain connected to the point of sale in this arena.
In the year that has seen the 100th anniversary of the Titanic, the Costa Concordia disaster and the Costa Allegra incident, it is fair to say that the world of cruising has been on everybody’s minds. Perhaps unsurprisingly, there has been a reduction in recent growth in cruising – with all-inclusive still proving popular. The travel insurance risk here is that the holiday cost of living is not normally covered but, with both cruise and all-inclusive, these costs are built into the holiday cost, increasing the average cancellation exposure.
Another increasing trend is that authentic holiday experiences, including conservation, adrenaline or remote destinations, have been on the rise. However, these types of holidays have limited access to quality or nearby medical care, often needing specialist or long-distance extraction or repatriation as well as higher cancellation costs.
Any insurance industry should change with the times and the risks of travel are always changing in one way or another and our products should reflect both the way customers want to buy insurance and what they want covered.
Sometimes, what customers want or expect and what customers are actually willing to pay for will differ. Their perception of value is often different to that of the insurers so our primary task is to convey the value of the product. In the current climate, customers are keen to have airline insolvency cover but also regard cover for loss of earnings as a high priority. As an industry, the time has maybe come to completely revamp the standard cover included in travel insurance and replace it with cover that customers perceive as more valuable?
Greg Lawson, Head of Retail at Columbus Direct
