The ITIJ team have been reporting live from ITIC UK in Bournemouth this week (May 2024) sharing the discussions that took place at the conference. Read all the reports here.
Mark Allsopp, Head of Travel Insurance at Taurus Insurance Services, started his session by considering the evolution of product differentiation and how it has developed over the past decade.
He spoke about the importance of evaluating the following criteria:
- A price-driven mentality in UK financial services
- Product designed to meet a price point
- Product offered in the same way it has been for decades.
Allsopp added that very little has changed in the last 10 years with a continued reliance on price comparison for product differentiation.
Current cover is geared towards the perils being covered, rather than the perils customers would like to be covered. According to Allsopp, customers are not looking at defined perils. He asked: how do we educate and meet expectations better?
Focusing on cancellation of sports and activities in relation to travel product differentiation, in the UK, Allsopp noted that a typical product provides cover for fewer than 10 defined perils alongside more than 20 exclusions. Australia, on the other hand, he added, has 10 defined perils with fewer than 10 exclusions.
Allsopp went on to say that customers might expect to be covered for anything outside of their control, emphasising that more education is needed on who is liable for providing compensation. Many customers presume that if they have insurance, insurers will provide a payout for all circumstances. He pointed to the fact that customers expect full cover when independently booked and anticipate a typically high cancellation claim declinature rate, which probably won’t meet customer expectations.
He noted that, despite higher costs, ‘cancellation for any reason’ (CFAR) products are gaining popularity in the US, whereas Brits are more price-driven, and are resistant to higher-costing insurance.
Allsopp determined that if it is not the main purpose of a holiday, activities such as table tennis, ten-pin bowling and swimming should be covered as incidental, concluding that a needs-based question when determining cover may be a solution to policy gaps.
He asked if an ageing population combined with medical screening negates risk for over-65s, and suggested we reassess the age limit for winter sports due to the rise in fitness of individuals travelling later in life.
Anna Sant, Managing Director of A to Z Insurance, began her discussion by looking at changing customer expectations in relation to destinations and zones.
She first highlighted the increase in customer demand due to trust being impacted by the pandemic, emphasising the rising pressure for companies to stand out in a crowded marketplace.
She highlighted the industry’s significant growth in parametric automated claims tech worldwide. Preventing fraud by using data to validate losses and events frees up human claims resource to focus on the ‘human side’ of claims and more complex claims.
According to Sant, 17% of consumers are unsatisfied with a claim response within 48 hours and 42% are unsatisfied with responses within a week. Sant suggested that real-time service fills the gap that a traditional insurance policy cannot deliver.
She pointed out that while services such as an online GP do not replace a 24/7 emergency assistance line, instead they offer an additional service providing real-time help for travellers in need. With access to an English-speaking UK doctor anywhere in the world, the GP arranges the prescriptions online to be collected at a local pharmacy. The service helps reduce underwriting risk and claims costs for overseas outpatients, family doctor and emergency room visits.
Sant mentioned that Sitata and Riskline offer technology solutions for the travel industry, including 24/7 access to vital trip information regarding a chosen destination and summaries of security and travel safety tips and advice. The technology also provides visa, health safety, and document requirements, she expanded. On top of this, travellers are also able to locate the nearest hospital or GP service in an emergency.
Sant went on to say that medical limits offered on policies today will range from £5 million to £20 million, with most UK customers unaware of medical costs within the UK or abroad. The Global Health Insurance Card (GHIC) provides access to state medical treatment when travelling in Europe. However, according to Sant, around two-thirds of UK travellers do not have a valid GHIC when they are visiting European countries.
Sant delineated three key zones for annual policies, which include:
- Europe
- Worldwide excluding the US, Canada, the Caribbean and Mexico
- Worldwide.
Sant recognised that this can be a challenge for both insurers and customers. When grouping countries with different risks it can be difficult to roll out a policy for an entire region.
She also considered that customers aren’t always aware of why annual policies are grouped into the above zones.
Sant reflected on the ever-changing nature of the world from a rating perspective, leaving the legacy ways of rating by region outdated. She pointed out that increased impact from climate change, weather events, and political instability can change the risk profile in an instant.
Overall, Sant suggested that customers are becoming more demanding and want instant solutions, meaning that the travel insurance industry needs to continue to adapt and evolve. Content and clarity are key to customers understanding why insurance is important. Further to this, social media platforms and influencers will play a key role in educating consumers in the future.
Andrew Tolman, Head of Travel Insurance at Allianz Partners UK, continued by defining product differentiation and evaluating how to meet the specific needs of customers.
Tolman defined travel insurance product differentiation as a process by which insurance providers distinguish their travel insurance offerings from those of competitors. He noted that it requires identifying the unique features, benefits, and services that set their products apart in the marketplace. The aim is to attract customers by addressing their specific needs, preferences, and concerns, thereby creating value and competitive advantage.
Allsopp highlighted the three types of policies in the UK: single-trip (typically up to 180 days), annual multi-trip (unlimited number of trips of up to 31 days each in a 365-day period), and backpacker or gap year trip (up to 365 days).
He elaborated on this by explaining that the four typical levels of cover are basic, standard, comprehensive, and tailored. Each of these are differentiated by cover limits, excess, covered items, services, and more.
Tolman observed that single-trip policies are still the most popular while annual multi-trip policies have been growing since the worst of the cost of living crisis (October 2022, with inflation at 11.1%). This signals a reversal in trend to opt for cheaper single-trip policies and indicates a recovery in consumer confidence to travel more times per year.
He went on to outline:
- 80% of UK consumers will travel the same amount or more in 2024 compared with 2023
- 68% plan to spend the same or more on travel in 2024 compared with 2023.
Considering trends, Allsopp observed that older travellers are looking for more comprehensive cover and value the flexibility of cover. Alternatively, Gen Z are more likely to buy via comparison sites, or base their decisions on social media influencers.
Further to this, Allsopp stated that the top spend on ancillary travel products in the UK is insurance – the most popular ancillary service. He elaborated by saying that the UK is the third highest country surveyed for travel spend on ancillaries for travel insurance (behind Australia and Singapore).
Allsopp concluded that UK consumers value travel insurance and see its growing importance. He noted a recent Skyscanner survey which indicated that 51% of UK consumers saw buying travel insurance as being more important than it was the year before.
Considering the main changes for the industry’s future, Allsopp suggested that the product offering needs reassessing. A member of the audience suggested that customer experience and technology are the most important areas to focus on, and Sant added that education and communication will be key. Mandy Langfield, Director of Publishing at ITIJ, rounded up the session by suggesting that simplicity is the vital to improving customer satisfaction and engagement with policies.
