Increased regulation on embedded cover
During the recent royal commission into the financial service industry, add-on and embedded insurance was (rightly) targeted and large institutions are already starting to make reparations. Travel insurers are waiting for the regulatory changes that are bound to follow. This will impact the way insurance is advertised and sold through third parties such as banks, airlines, travel agents and online aggregators.
Tapping into Affiliates
The retail market is saturated with competition; diluting reach and drowning traditional share of voice. As with all things in marketing today, influencers, interest-groups, and niche brands with fiercely loyal followings become fertile ground for ‘putting in a good word’ and gaining brand awareness. But in 2020, insurers are not merely advertising or seeking endorsement, they’re recruiting ambassadors to sell on their behalf. It’s a win-win, with great earning potential for the affiliate, and new routes to market for the insurer. The trick in all of this will be the ease with which insurers allow their affiliates to sign up, sell, and see money in the bank.
Outsource everything
Even travel insurers need help selling travel insurance. It’s hard to keep up in a digital world, especially for brands who started out analogue. In 2020, mainstream insurance companies will continue to outsource their tech, as is prevalent in all traditional industries. Policy administration, the administration of wholesale and retail pricing, fine grain pricing catalogues, yield optimisation, fine grain loss ratio control, modular purchase paths and live chat – these are just some of the areas in which insurance tech specialists have the lead. In 2020 the door is open for the big guns to capitalise on these gains. The insurance tech’s SaaS solutions, service level agreements, and APIs will be in demand.
Feeling Fine Grain
In 2020, no one likes to be pigeon-holed. A highly individuated consumer demands products that speak to her needs. A focus on fine grain pricing, combined with sophisticated product cataloguing, holds the key to bespoke travel insurance products and bundles. With gains to be made, customer-centric insurers will prioritise pricing permutations in their product design. Agile tech spells the difference between theorising and delivering.
Parametric insurance
Don’t be put off by the insurance jargon, in 2020, parametric insurance is here to stay and it’s good for the customer. It covers the probability of a predefined event happening instead of indemnifying actual loss incurred. In the case of travel insurance, this could be a specified cash payout in the event that your flight is cancelled. The good news for both the customer and the insurer is that the status of the flight is binary, it’s either cancelled or not cancelled. There’s no grey area when it comes to claiming the benefit and the cash payout is pre-defined so the customer is aware of what they’re entitled to receive.
BYO cover
Build your own, or customised cover is something the industry has been flirting with for years. The concept has taken root in health insurance and now we see it crossing over in earnest to travel. Beyond the tech, enabling customers to seriously tailor their cover, and do so appropriately, relies on customers understanding what they need. Brands that succeed in offering just the right amount of options, plans and extras, while equipping customers to access digestible policy information, buy fast, and avoid under insurancing, will emerge victorious.
Smarter Aggregators
The large price and insurance aggregators in Australia are just getting started. As they grow, the brand awareness for aggregators and their market share will lead to good outcomes for the customer in the form of increased competition. Insurers on the other hand, wary of what occured in the UK market, are concerned about over-delivering value to customers and avoiding a cut-throat race to the bottom on price. Communicating and delivering this value to customers is key to the success of distribution through aggregators and the smart players are beginning to make changes in this direction.
Instant claims… or close to it
There are three key factors that have lead to the ability of insurers to process travel claims in just a few minutes.
Travellers now take their mobile devices wherever they go and this is good news when it comes time to claim.
Insurers have also invested heavily in reducing the friction in the claims process to ensure customers get the best service.
Global payments services such as Airwallex, Transferwise and the advent of NPP here in Australia enable rapid transfer of funds directly to the customers account.
The future of these claims is through advanced machine learning and artificial intelligence engines to help insurers weed out the small amount of fraudulent claims and instantly pay customers. In 2020, the foundations for instant claims are being laid.
9. Market consolidation
Travel insurance in Australia is highly competitive and the large insurers have significant advantages over smaller players. This has lead to some consolidation in the market over the recent years including:
NIB acquiring the World Nomads Group and then going on to acquire QBEs travel book
Zurich purchasing Cover-More
This trend will continue with some of the smaller players looking to exit.
5 Travel insurance consumer trends to spot in 2020
Transformative travel
In 2020, be on the lookout for hashtags and concepts lifted off yoga mats and wellness mags. Gone are the days of ‘bucket-lists’ and 20 postcodes in 20 days. Instead, we’re now about ‘slow travel’, ‘retreats’ and ‘transformative travel’. Insurers that cover transport alternatives – such as sailing, cycling and carbon-offsetting, will win the conscious-consumption vote.
Extra experiencial
Transformative travel connects to ‘doing’ rather than ‘seeing’. In 2020, travellers are getting active in pursuit of happiness. They’re walking, they’re houseboating, and missioning off-grid. For insurers, an uptick in activities and exotic locations, leads to risk, which leads to soaring premiums. Instead, we see the industry responding with an adaptive approach to policy building, by offering a truly broad range of optional extras built around trending activities, and better cover for non-included medical conditions.
Essentially covered
For decades, travel insurance offered two choices, ‘basic’ or ‘comprehensive’. In 2020, as consumers continue to individuate, and product differentiation rises, we see insurance plans diversify from the binary standard. In particular, entry level cover, or bare essentials plans, will join the market. As emergency medical cover is the key driver to purchase, watch as ‘medical-only’ plans find an audience.
Self-service
Remember the days of calling up an insurance broker to buy travel insurance? The industry has come a long way. But in many cases, the business of travel insurance can still feel analogue and ‘manual’. In the same way that consumers want instant quotes, and lightening quick purchase paths, they also want to access customer service and information without having to navigate a phone tree within restricted hours. Compared to the customer support offered by finance and health insurance, travel Insurers are lagging, but in 2020, the introduction of chat bots, live chat, user profiles and dashboards will bring the industry up to speed.
Value over price
Travellers who’ve had to make a travel insurance claim understand that buying travel insurance purely on price is not a good idea. According to the Smartraveller Survey of Australians’ Travel Insurance Behaviour 2017, “33% of travellers just choose the cheapest policy without checking the small print”, but this trend is changing. More and more customers are educating themselves that the cheapest is not always the best.
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