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| Agents can effectively use simple examples of client trips gone wrong to show clients why travel insurance is a necessity. |
It’s been a great year for the majority of travelers who took a vacation, had a fabulous time and avoided any serious travel hiccups. For others, though, the year brought unexpected challenges. Political upheaval across the globe left some clients stuck abroad. Loss of power by several ships at sea interrupted sailing schedules. Mother Nature had her say with wildfires, storms and earthquakes.
Other issues were more personal, such as a traveler getting hurt or becoming ill abroad, or cutting short a vacation or delaying the start of a trip due to a family emergency or illness. “If we learned anything from 2013, it’s that no form of travel is without risk,” stresses Alan Josephs, chief marketing officer, Allianz Global Assistance USA. “Whether it’s cruise ship breakdowns or large events such as fires, floods or earthquakes that may disrupt plans, no one can guarantee a trouble-free trip. In an increasingly risky world, trip insurance gives travelers the confidence to travel.”
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Putting it in perspective, a survey conducted for the US Travel Insurance Association last year found that one in eight U.S. adults—12 percent of travelers—had their travel impacted, or considered changing their travel plans, because of natural disasters or world events. Yet, of the travelers impacted, only 29 percent had purchased insurance.
Echoing the philosophy of most agents, “I always stress the importance of travel protection to my clients,” says Alan Rosenbaum, vacation specialist, CruiseOne, Johns Creek, GA, noting it’s not because of the few dollars of commission he makes on an insurance sale but because they need to be protected.
“I’ve had clients make claims ranging from delayed luggage to a heart attack onboard a cruise,” says Rosenbaum. “Although the odds of something bad happening are very small, the cost can be very large.” He cites the cost of an emergency medical evacuation at tens of thousands of dollars, and he sells policies that cover up to $250,000, so clients feel safe traveling abroad. Without any protection, “that’s a lot to self-insure,” he emphasizes.
So as 2013 draws to a close, though, what travel protection trends do insurers see, continuing over from 2013 or newly emerging for the coming year?
More Creative and Inexpensive Insurance Options: In mid-October, Allianz Global Assistance USA launched a new “Classic Plan,” a portfolio of plans that includes basic core coverage popular with many travelers, yet flexible enough so agents can add in other coverage elements, depending on client needs. For example, the agent might add “Required to Work” coverage to cover the traveler’s work obligations, or “Trip+,” which provides double the coverage limits of the base plan.
Insurers are seeing a rise in multigenerational family travel and responding accordingly. “Family travel isn’t just about parents traveling with kids anymore,” Josephs says. “It’s often grandparents with grandchildren or all three generations traveling together.” On all his firm’s Classic Plans, kids 17 and under can be added for no additional cost when traveling with parents or grandparents.
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In addition, “the rise of low-cost domestic air tickets has made long weekend trips to visit family or friends more attractive to the traveling public,” says Josephs. So his firm just introduced an inexpensive Essential Plan, designed for domestic air travelers who have their own domestic health insurance. They usually don’t need the robust insurance coverage that a couple might buy for a two-week cruise or a three-week tour of Europe.
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| An emergency or illness can delay the start of a vacation or cause the trip to be canceled altogether. |
Sheri Machat, senior vice president, MH Ross Travel Insurance Services, says all her firm’s plans now feature the same coverage, with only benefit limits changing from plan to plan. Plus, it offers new children’s rates with flat premiums regardless of the trip cost; only one adult is required to be on the policy.
Carlos Cividanes, executive vice president of industry relations, TravelSafe Insurance, mentions that his company has introduced flat-rate pricing for those 18 and younger, which “allowed us to lower prices for other age categories as well in our vacation plans.”
TravelSafe now includes non-medical trip cancellation reasons such as Hurricane Warning or Cancel for Work reasons in its Classic and Classic Plus Plans, instead of making them options that must be selected and paid for. Other insurers have also enhanced their offerings.
Enhanced Focus on Government Legislation or Improved Regulations: As the industry moves into 2014, Cividanes wonders: “Will Obamacare eliminate international medical coverage from the few major medical plans that still offer it, leaving travel insurance as one of the few ways to be covered, as is the case with Medicare?”
Machat, too, says that that’s something to watch in 2014. Cividanes stresses that, as yet, the industry can’t likely predict what the effects will be, but hopes that the issue could make more consumers aware that when they travel abroad they don’t usually have international medical coverage. Cividanes and other executives also wonder how soon it will be before agents will have the ability to offer travel insurance products to clients outside their own state.
Machat reports that ASTA and the U.S. Travel Insurance Association, an organization representing insurers, have been working together with the various states to come up with uniform licensing standards on how agents are licensed. “That model has been approved in 20 states and is being discussed or proposed for future legislation in other states,” Machat says.
Scott Ackerman, senior vice president, sales, Travel Guard North America, is impressed with how the travel industry has pulled together on the issue: “In particular, industry associations are pressing for important reforms like the Travel Retailer Model Law, which will enable travel agents to discuss travel insurance with their clients in a meaningful way, but without the need to secure potentially dozens of licenses to sell insurance.”
More Robust Resources for Easier Sales: Isaac Cymrot, vice president of sales and industry relations at Travel Insured International, says his company has a new TravelInsured Agent Portal (TAP), a travel agent dashboard for fast travel insurance quotes and purchases. It’s designed to help agents save time and shorten the overall booking process.
It will also generate policy options and price quotes instantly; house all contact information, trip details, insurance estimates and purchase history; pull data from GDS and Clientbase systems, making the integration effortless, and incorporate previous customer data for new quotes.
The cost of an emergency medical evacuation can run to tens of thousands of dollars without any protection.
Suppliers also have developed e-marketing tools to assist agents in keeping track of client purchases. “Too often the agent quotes insurance once, and never follows up, even when the client doesn’t say no,” says Cymrot. “Follow-up, like with anything you sell, is vital and there are resources available to help you.”
“Travel agents are doing more with less and they tell us they want selling travel insurance to be a very simple process,” Allianz Global Assistance’s Josephs acknowledges. About 25 percent of his group’s customers buy his firm’s basic product, while 75 percent purchase a plan with more benefits and higher coverage levels. With the introduction of a new family of plans, “we’ve eliminated non-commissionable fees and made selling travel insurance easier for agents,” he says.
USTIA has also developed resources for agents. Earlier this year, it launched a dedicated YouTube Channel that gives consumers a look at medical evacuations and educates viewers about the value of travel insurance. Titled “When Travel Medical Disaster Strikes: Saving Travelers’ Lives,” the videos feature interviews with medical personnel who are on the frontline of transporting sick and injured travelers.
Viewers learn about what happens when life‐saving medical transport is needed to get a patient to a hospital or to return safely home. Videos range from 1:43 to 4:34 minutes in length and can be accessed at www.youtube.com/user/USTravelInsurance. The association also operates a consumer outreach web site—www.trip.ustia.org—with tips on travel, health, safety and security.
Increasing Value of Travel Assistance: “Probably the most important thing to take away from the events of 2013 is the impact of a good travel assistance company,” Cymrot emphasizes. “The ability to contact an expert at a moment’s notice was vital to so many travelers this year.”
Assistance services—included with many travel insurance policies or available separately—aid travelers caught in emergency situations, such as the 2011 Egypt political uprising or the 2012 Costa Concordia tragedy off the coast of Italy. Services can include providing important safety intelligence, assisting in replacement of lost documents such as passports, and even helping arrange transportation out of a destination deemed unsafe.
In the past, Cymrot says many travelers thought the assistance company was only there to provide emergency medical assistance. Now, they’ve learned about how valuable the other provided services can be.
The Rise of Medevac Options: Some clients opt for emergency medical evacuation protection, rather than full-bodied insurance. For example, Medjet Assist, a global air, medical transportation membership program for travelers, isn’t insurance but a helpful supplement. The cost is $260 per individual or $395 per family per year.
Medjet says its biggest challenge is that most travelers don’t know it exists, or they think that their own credit card or standard trip insurance covers medical evacuation, not always the case.
If a Medjet member is hospitalized more than 150 miles from home, Medjet reviews his or her condition with the attending medical staff, and will arrange for a medically equipped and staffed aircraft to fly the traveler free of charge to the hospital of their choice in their home country. There are no health restrictions, co-pays or cost limitations, and no extra charges after the membership fee is paid.
Need to Educate Consumers About Policy Terms: When agents are able to educate their clients about the value of purchasing comprehensive travel insurance solutions—such as coverage for common to more complex travel disruptions, 24/7 access to travel assistance, and emergency medical services—selling the products becomes much easier, Travel Guard’s Ackerman believes.
In the USTIA study, of the people who bought travel insurance, 96 percent reported satisfaction with their travel insurance, and nearly half—49 percent—said they were very satisfied. But there certainly are times when clients are unhappy, particularly when a claim is denied. Often, that’s because the policy didn’t fit what the client actually needed, or, more commonly, that the traveler just didn’t understand what he or she bought.
Insurers say agents should encourage clients to ask lots of questions to insurers. Suppliers have toll-free numbers and employees who can assist in making sure the client has the right policy for his or her travel circumstances. How important is it? John W. Cook of QuoteWright.com, a division of the BC Group LLC, a travel insurance aggregator, points to the many woeful travelers’ tales on the Web.
“Most boil down to misunderstandings surrounding pre-existing medical conditions, or a trip cancellation or interruption for other than a covered reason,” says Cook. “Ask any traveler who’s had a less-than-favorable experience trying to collect a travel insurance claim whether or not their expectations were unreasonable, and, as one would expect, the traveler will adamantly argue that a canceled trip warrants reimbursement.”
Cook says that until a client reads the policy completely and consults an expert when purchasing the insurance, the expectation of reimbursement may be “unrealistic.”
The Rise of Social Media for Insurance Content: “Just like with travel, there are more choices than ever, and more places than ever, on the Internet to find travel insurance,” says Cymrot.
While consumers may not understand all the nuances, they are more educated than in the past about insurance, Cymrot says, crediting mainstream media, social media and current events for the shift in the right direction: “We have moved on from the days of ‘what’s travel insurance’ to ‘what’s the right type of travel insurance.’ ”
Social media has helped agents tell the insurance story. When Travel Guard recently recognized that more agents were using social media to gather and redistribute travel trends and tips to their clients, it increased the distribution frequency of its resources to agents, so retailers can use those to communicate with followers in social media channels.
“Being present in the places agents turn to for a helpful tip was an important decision,” says Ackerman, who reports agents are now sharing that insurance content in their social channels.
Shifts in Length of Coverage and Costs: “This year we saw a trend back towards longer trips and higher trip costs,” says Cymrot. He says both the average length of trips and average policy cost have increased, which is “no surprise considering the similar trend in travel sales, and how dependent our premiums are on those details.”
Separately, Cividanes says the issue of primary versus secondary medical coverage is also something to watch moving forward. “The traveling public has been trained to look for primary coverage, so agents should check to see if what they are offering clients is primary and, if it is not, that they have a primary medical offering.”
His firm’s plans include primary medical with no deductibles as well as automatic commission protection for agents. Of the primary coverage issue, Cividanes says, “It’s so important that the U.S. State Department puts a warning in every U.S. passport advising people to see if their medical coverage applies internationally, provides medical evacuation, and upfront payment.”
As 2014 is just weeks away, Medjet reports it’s seeing a trend of resurging international travel compared to the past two to three years. It also has seen a double digit increase in corporate business the past two years. Medjet also notes that one in 30 people will become hospitalized while traveling abroad.
As the industry transitions into the new year, travel agents might share their best examples with clients. Explain exactly what can happen before or during a trip that could cause a client to cancel or interrupt his or her vacation. “By providing examples of times that travel insurance has saved the day for other customers, travel agents can make a compelling case about why travel insurance is such an important part of the booking process,” says Allianz Global Assistance’s Josephs.
Cividanes adds that upfront payment is a very strong argument that agents can use when clients say they don’t need coverage because they have it through a credit card. Cividanes adds that most of those plans request the client to carry the full medical cost on their credit card balance until the claim is settled.
Ackerman stresses the continuing value of two-way communication between partners: “It’s important to us that our agent partners feel as cared for as their clients we serve,” Ackerman says. “We continue to listen to and learn from the agent community, with a goal of making their experience as pleasurable as that of their clients.”
Agents also need to keep abreast of supplier policy changes. Recently added for no extra premium by M. H. Ross are: normal pregnancy even if it occurs after insurance is purchased; attending a family member’s childbirth; and extension of the school year, say an extra day, that creates a conflict in trip dates. Machat also says the insurer now offers an optional Sports Upgrade Pack to cover medical benefits if a client is injured while bungee jumping or skydiving.
Cymrot urges agents to not be afraid to tell the clients that you offer the best protection that complements their vacation. “Don’t wait until it’s too late to talk about insurance,” says Cymrot. “Travel protection should be included in the qualifying conversation. It helps establish the value proposition of using a travel agent and most agents leave it out. It fits right in with ASTA’s motto of ‘without a travel agent you’re on your own.’ ”
Who Buys Travel Insurance?
Allianz Global Assistance USA says the average customer purchasing its insurance products is someone who is mid-50s in age. Slightly more than 50 percent of buyers are women. Buyers are frequently booking travel for two. “While we have many other customers with different characteristics, the trend points to the importance of empty nesters,” says Alan Josephs, Allianz’s chief marketing officer, noting this group has the time and money to travel and they are often interested in traveling outside the country. “They tend to be thoughtful and conservative and are very interested in protecting their travel investment with trip insurance.”
In a recent survey, Allianz Global Assistance asked customers to name the top reason for purchasing travel insurance. Most (46 percent) buy it to protect against losing their pre-paid trip costs if they have to cancel their trip. The second most popular reason was to obtain coverage for medical emergencies while traveling (37 percent). Other reasons cited by customers were to protect against trip interruption (9 percent); for luggage delays or loss (2 percent); for travel assistance (1 percent); and other reasons (6 percent).
Want more intel? In a survey conducted last year by the United States Travel Insurance Association, more than a quarter (27 percent) of consumers surveyed—whose household income exceeded $50,000—said they would likely buy travel insurance. Slightly more than one in five (22 percent) aged 55 or older said they planned to purchase travel insurance.
According to the USTIA survey, those 18–34 years of age were the most likely to have their travel plans changed or impacted by natural or other events (20 percent), followed by college graduates (17 percent) and parents of a child under 18 (16 percent).