Travel Advisors See Trip Insurance Opportunity Where Credit Cards Fall Short

Recent travel disruptions following the bombings in Sri Lanka and the grounding of Boeing 737 Max 8 aircraft around the world are creating awareness of the need for travel insurance and boosting sales. While many travelers were once prepared to take a chance, authorities around the world are warning that trip insurance is essential.

“You should purchase insurance before you travel,” the U.S. State Department warns on its travel website, noting that the U.S. government does not provide medical support for its citizens overseas.

Similarly, the UK Home Office urges citizens to buy the right travel insurance before traveling abroad. It warns travelers to be aware of the very high costs they might face for emergency medical treatment and getting back home if they are uninsured.

The Association of British Insurers recently pointed out that any holiday can quickly turn into a nightmare if things don’t go according to plan.

“Making sure you have a travel insurance policy in place before you travel can provide you peace of mind and access to assistance if the worst does happen,” it stated.

Rising Demand Among Travelers

A growing number of U.S. travelers are heeding advice to buy travel insurance, according to the insurance comparison site Squaremouth, which reports a 24 percent increase in travel insurance purchases for trips in 2019 compared to the same period last year. Travelers are buying more policies specifically with emergency medical and medical evacuation coverage for international trips.

Looking ahead, Squaremouth predicts the number of travelers insuring their international trips in 2019 will continue to increase as more countries adopt stricter travel insurance requirements.

Squaremouth is also anticipating increased purchases of cancellation insurance, which has already risen by 8 percent over last year. It cited the recent yellow vest demonstrations in Paris and the U.S. government shutdown at the beginning of the year as drivers for the growth in this kind of coverage. It should be pointed out that Squaremouth isn’t exactly a disinterested observer when it comes to travel sales.

In Australia, rising demand for trip cancellation protection has prompted Cover-More, one of the country’s largest insurers, to add Cancel-For-Any Reason coverage as one of its travel insurance options that advisors can offer clients.

In 2018, 34 percent of the claims Cover-More paid were due to amendment or cancellation, 25 percent were for overseas medical or dental expenses, 20 percent were for lost or stolen luggage, 14 percent were for travel delay, three percent for rental car damage, and two percent were for delayed luggage.

Waste of Money?

Not everyone believes travel insurance is always necessary. Massachusetts-based Travel Insurance Review identified several scenarios where insurance is a “waste of money.” The advisory website Travel Insurance Review noted that in situations such as short vacations or trips where the travel costs are modest, travelers may not feel they need insurance, especially if they previously purchased expensive coverage and did not need to file a claim.

The two major factors that determine the need for insurance, according to Travel Insurance Review, are whether travelers are worried about losing money because of a canceled, delayed, or interrupted trip, lost bags, or a medical emergency. Another factor is whether or not their existing health insurance covers medical mishaps on the trip.

British travelers appear to be less convinced of the need for travel insurance than their counterparts in the U.S. and Australia, according to a recent survey by Co-op Insurance, a UK-based general insurance company. The survey found that many holiday makers still “play a travel lottery” as they don’t think it’s necessary to buy travel insurance.

Over 44 percent of respondents said they are not taking out travel insurance to protect their next trip, with 23 percent saying they don’t need protection because they’re “not going away for that long.”

Opportunity for Advisors

For travel advisors, heightened awareness of the need for travel insurance is creating opportunities for increasing revenue and adding value for clients. While there is competition from other sources, including credit cards and low-cost online travel insurance providers, advisors are well-positioned to sell insurance because they are able to build relationships with their clients and explain the risks and benefits.

Stacey Fugare, of Boca Express Travel in Boca Raton, Florida, said travel insurance is a “significant revenue source” for her agency and that advisors actively upsell to customers by offering insurance.

“We are strong believers in protecting our clients’ investments in their vacation as well as making sure they are financially covered in case of a medical emergency while traveling,” Fugare said.

“In my experiences, both personal and professional travel insurance is an important part of a vacation package. As with any insurance, we hope that we never have to use it. In case of an emergency, it is comforting to know that you do not have to worry about finances while dealing with a crisis.”

Cover-More, part of Swiss multinational Zurich Insurance Group, works closely with travel agencies and advisors, said Judith Crompton, chief executive officer, Asia/Pacific.

“Just as travel agents seek to enrich their customers’ travel experience, Cover-More positions our travel insurance as part of the overall travel experience — as something that can add value to the traveler’s journey before, during, and after their trip,” she said.

While many advisors offer insurance as an upsell, Crompton said its true value cannot be measured purely in monetary terms.

“With airfares and travel packages being in the thousands of dollars and travel insurance in the hundreds of dollars (if that, for some trips), there is a substantial differential in contribution to revenue,” she said. “But what travel insurance offers for both the traveler and the travel agents is peace of mind and, ultimately, customer loyalty, so it is difficult to quantify that contribution in dollar terms.”

Although major credit card companies provide free travel insurance, Fugare at Boca Express Travel said it’s important that clients know that their cards may not offer full coverage.

“Sometimes we will need to supplement their coverage,” she explained. “My main goal is to make sure that a client has travel protection. If they tell me that they have insurance through their credit card, I ask them to double-check the coverage offered by their cards.”

Cover-More, like other specialist travel insurance providers, offers some benefits exclusively through its travel advisor distribution channel. These include sending travelers information before each trip that is relevant to their destination and situation, including traveling with kids, avoiding food-borne illnesses, and managing medications across time zones.

“We also encourage travelers to download our Travel Assist app, which will enable us to send them security and weather alerts based on geo-location,” Crompton said. “For example, customers with our app in Paris earlier this year were alerted about the ‘yellow vest’ protests and which parts of the city to avoid.”