Analysis: Travel insurance in a digital world

Fasten your seatbelts – travel insurance is heading towards being a fully-fledged member of the digital revolution and many travellers will say it is about time.

Apps, tie-ups with digitally-minded partners, online claims services and fast payments are now happening, energising a market that had become somewhat stagnant in recent years.

True, providers such as Staysure (underwritten by German ERV) have performed well as a niche over 50s specialist, but there is little brand loyalty or awareness of what constitutes quality cover. Indeed, while insurance is generally stereotyped as a grudge purchase, travel takes the biscuit. However, a number of recent developments show welcome change.

One new name is digital banking start-up Revolut, which in January launched pay-per-day cover with geolocation technology that tracks where customers are and so can be turned on and off. Consumers only pay for the days when they are actually away and the company is also offering annual cover – all underwritten by White Horse Insurance Ireland.

Meanwhile large insurers such as AIG, Axa and Zurich have upped their game.

Christopher Price, Europe, Middle East and Africa head of travel for Zurich says: “There’s exciting stuff going on - digital advances means insurers can take off the straightjacket, bringing new developments to market far more quickly than they would have done in the past. Costs are lower as in many cases, the coding work has already been done, which is why we are seeing more activity.”

In terms of pay-as-you go travel, Price says this is something that Zurich may look at, pointing out it will suit the needs of millennials who favour digital and older people, who have the disposable cash to travel frequently and with little notice: “We’ve had discussions with a mobile operator and while there are always going to be compliance issues, the cover is pretty straightforward. Users will have pre-registered and trigger the insurance when they need it, such as when they are at the airport, and it also does not have to be app based.”

Large insurers are seeking to win a share of the insurtech spoils by developing their own digital hubs. Zurich’s Innovation Foundry is one such initiative and had a role to play in its venture with Easy Jet, that aims to offer dynamic pricing models aligned to customer needs. 

Another interesting digital development is automated medical screening tools such as Cega’s Antidote, that seeks to simplify pre-travel medical screening for travellers.

Antidote automates this assessment process, allowing customers to self-declare pre-existing medical conditions to their travel insurers, using intuitive technology. It incorporates pre-prescribed question sets and provides insurers with measurable algorithmic outputs, consistency in underwriting outcomes and flexible risk acceptance.

However, the Association of British Insurers states around one in four travel without any insurance and research from Mintel found that for 60% of respondents price was most important when buying this cover. So if ever a sector needed cost savings that digital can accelerate, then it is travel.

Challenging conditions

The annual Mintel travel insurance report, produced in February 2018, shows the value of gross written premiums in the market fell by an estimated 3% to £653m in 2017, continuing the downward trajectory since 2014. It says this is due to factors including take-up through packaged bank accounts, holidays being booked online without cover and reliance on European Health Insurance Cards.

Conditions for insurers are chillier since the weak pound has driven up the cost of providing insurance and staycations increasingly make more financial sense. Further, medical inflation is piling on pressure, with the average value of medical expense claims rising and cutting into profitability. The research shows these accounted for 54% of total claims in 2016 at £199m.

The Financial Conduct Authority is also keeping a watchful eye on the market, seeking to ensure that those with long-term health conditions or disabilities are not charged disproportionately high premiums.

Scope of the market

Unlike motor, travellers have less incentive to shop around as Mintel showed over one-fifth of consumers held travel insurance as part of a packaged bank account. It said nearly half (47%) of consumers held annual travel insurance as of November 2017, but only 21% of these owned a standalone policy.

Although packaged bank accounts have attracted criticism for offering poor value, the travel insurance is popular, with 82% saying they valued having this included within their account, and 47% of consumers specifically choosing their account to benefit from it.

Of those who bought independently, most (60%) used price comparison sites which, Mintel added, make it difficult for brands to promote attractive features or service benefits.

Jamie Hersant, head of lifestyle claims for Axa Insurance, comments: “Too often there is apathy when people buy travel insurance. They only want to focus on their holiday - who wants to think about what could go wrong? Many have little awareness of healthcare abroad or realise there won’t be anything like an equivalent to the NHS.”

Advantages in an app

But, when the going gets tough, innovation can surface. For instance last year Axa developed an insurance app, designed to offer extra benefits and convenient digital storage for travel documents. It also includes extras such a medical translator and a jet lag calculator to help with disruputed sleeping patterns.

According to Hersant: “We needed to make it user-friendly and it will keep evolving – with more useful features to encourage people to download it – the challenge is there may be not much storage space on a phone, so it has to be perceived as useful.”

The app can advise customers on the nearest hospital they should attend if treatment is needed. This can have benefits for the insurer too, since there have been cases where hotels have received kickbacks for referring guests and where charges have been inflated.

He adds: “We want customers to go to a hospital where they will be treated respectfully and where we will know that they will not be over-treated. Hospitals we know should also be able to provide quick access to care and will be able to check documents via the app, making the process as stress-free as possible.”

Partnerships present opportunities

Last October, Zurich began providing insurance to Easy Jet customers, the latest in a series of moves to grow its travel portfolio. These include acquiring insurance and assisted solutions provider Cover More and online rental car insurance platform, Halo.

The Easy Jet venture uses variables such as destination, time of year, group size and flight add-ons, to enable customers to buy single trip or annual policies directly from the airline’s website. This allows it to make sure cover is more relevant, so that if a traveller does not check in a bag, for example, they do not pay for baggage insurance. Or if booking a one-way flight, the price of insurance reflects this.

Transforming the claims process

If someone is taken seriously ill abroad, there can be no substitute for being able to get through quickly to an assistance professional. However, online notification is becoming popular for other claims.

“Most people want to buy online, but also manage claims, provided they are not an emergency, this way too,” says Hersant. He explains in the case of say, loss of baggage, Axa can be notified online and there is also the facility to upload information such as receipts. “If you have wi-fi, you can make a claim. It’s also the best way to be able to track its progress.”

He continues: “It’s also going to improve transparency. It’s perceived there is a lot of delays and smoke and mirrors with claims, but being able to see what’s been agreed and where the claim is has to be good news. For example, a customer arrived in Australia, but their luggage did not turn up. We were able to get them money through in 24 hours to make purchases such as a change of clothes and toiletries.”

Muir Robertson, managing director at claims and assistance provider Cega, says: “Technology has enabled us to offer our customers more choice, control and convenience, transforming the service. Digital developments over the last year, such as automated claims, have almost doubled the number of written compliments we receive from customers.”

Claims are regularly assessed while the customer is still abroad and payments continue to speed up – last year Cega saw a 15% annual increase in claims settled on day zero.

Cega has also developed a range of digital enhancements for its business, some in collaboration with Charles Taylor Insure Tech, part of its parent company. This includes the choice of fully automated claims, for all but urgent medical cases, the use of web analytics to measure customer interaction and satisfaction with the automated service and the implementation of Queue Minder, an automated system allowing customers to leave a message and receive a call back.

It has also launched a workflow management tool to make call handler availability commensurate with predicted call volumes. This proved effective during claims surges from the Monarch airlines failure and March snowfalls and resulted in halving call abandonment rates. Further, claims payment can now be made via Barclays Pingit.

 Corporate versus customer

Travel comprises consumer and corporate, but digital advances may bring the two closer together. Robertson points out: “One significant difference between the corporate and leisure travel sectors is that employers’ duty of care obligations drive demand for proactive travel risk management.

But, as both holidaymakers and corporate travellers set off for increasingly remote and challenging destinations, and risks in traditionally safe destinations become less predictable, corporate and consumer travel risk management needs may become more closely aligned.”

He adds: “Mobile technology can help prepare, inform and locate travellers and minimise dangers overseas. The mobile Itinerary Travel Tracking app we offer as part of our Intrinsic service links seamlessly with employers’ travel management programmes.

It enables businesses and travelling employees to reduce risk by sourcing integrated medical and security information from a single source, and requesting integrated assistance – if needed - via a single point of contact.”

Intrinsic is an online medical and security solutions service, aimed at firms looking to minimise risk for their employees and includes pre and post travel advice and training, assistance services including kidnap and ransom mitigation support and tracking.

The app has an employee check-in function and gives business managers information about a travelling employee’s real-time and itinerary-based location in relation to recent security and health threats. Alerts can communicate current threats to both managers and employees and advise employees to delay travel until risks are minimised. In an emergency, medical and security assistance can be requested by swiping a screen.

Risk management is also a key aspect of AIG’s corporate travel insurance offering and Ian Robinson, AIG’s head of UK group personal insurance, says cover is provided to businesses of all sizes, from those with just a few employees through to huge multinationals with thousands of employees travelling the world regularly. 

He points out that compared to cover aimed at individual consumers, there are still a few differences and business travel coverage tends to offer a more comprehensive suite of services. 

“Business travel policies offer a more holistic service providing support before, during and after travel and can require unprecedented levels of planning and coordination. Whether organisations have volunteers, students or religious groups going on an overseas trip or production crews filming at their next site, there are a host of potential hazards that can put their people in harm’s way. 

“We look to reduce the pressure on our client’s HR managers and one of these is through our mobile app. Whether it’s prior to travel, during the trip, or after the return home, our secure, member-only assistance app provides convenient access to in-depth travel, security and health information.”

Tools include security awareness training modules, in-depth country and city reports to help employees prepare for travel and keep them safe by advising them of any issues in specific areas they may travel to.

There are also a number of health-related tools such as the medical provider finder, with GPS that directs travellers to the nearest medical facility; the medical translation tool; and the drug brand equivalency tool. Another interactive service is Second Opinion, which provides health-related help via the phone, email, SMS, online chat, Skype or audio/visual web conferencing. 

If a problem does arise, the app has a ‘help’ button to provide urgent one-stop security assistance from AIG Travel. 

He adds: “Security is also an important consideration for employers sending their staff abroad, today more than ever. Unrest can occur anywhere, and it can escalate from merely worrying to dangerous very quickly. We provide a wide range of security options, from instant security SMS and email updates to your smartphone through to full evacuation support.”

Looking ahead

Digital is proving a force for good and consumers can expect a number of new developments such as a greater use of webchat within the sector – both Axa and Zurich have this on the agenda.

Artificial intelligence and automation are also increasing, and this should also be useful for fraud prevention. Robertson says this could include making it easier to spot which hospitals are regularly overcharging and digital analysis can determine when a photograph, submitted as part of a claim, was taken or a credit card used.

Price adds while the General Data Protection Regulation may present some challenges, there remains opportunity to offer more personalised cover through better analytics. “If we can learn more about where travellers are going and their preferences, then we can offer them more appropriate cover. We should be making it as easy as possible for every customer.” This may well be possible, providing customers indicate they are willing to share data.

There will also be increasing use of travel tracking apps for travellers to improve safety. Cega is working on Digital Doctor, which integrates video doctor and advanced diagnostic services into the medical assistance process. Robertson continues: “In the longer term, we’re looking at wider digital solutions to support customers overseas with, for instance, security and medical advice, country information, and health monitoring devices.”

Fresh thinking and new offerings through digital technology have finally arrived, and for travel insurance buyers, the journey ahead looks to be a far more engaging one.

Sponsored