Trends in travel insurance as the world takes flight (2024)

Cara Morton, group CEO of online insurance provider Cover-More, knew that the COVID-19 pandemic would turn travel insurance on its head and that tourists would expect much more from insurance providers once travel was possible again.

“Cover-More spent the two long years of the pandemic focused on digital transformation, a more relevant customer experience and product design that incorporated previously unavailable cover for pandemics,” she says.

“We also invested heavily in technology to support travel risk management services for both business and leisure travellers.
In fact, the Cover-More travel safety app that we launched in Australia in 2022 and in New Zealand in November 2023 is the first of its kind, delivering corporate-level travel assistance services to Australian and New Zealand leisure travellers.”

An unprecedented surge in travel in the years since the relaxation of COVID restrictions has been accompanied by an increase in demand for travel insurance.
Allied Market Research reports that the value of the global travel insurance market was more than US$14 billion in 2021, and a growth of nearly 25 per cent will see it reach US$124.8 billion by 2031.

Etiqa Insurance Singapore chief marketing officer Shirley Tan says Singapore’s outbound travel is on an uptrend, with residents making 5.15 million departures by air and sea in 2022, compared with 1.5 million departures in 2020.

“The uptake of travel insurance has increased as many Singaporeans experienced sudden cancellations and disruptions during the pandemic.

“We’re also seeing more travel insurance purchased for short trips, which is a change in consumer behaviour. Consumers previously perceived nearby destinations as a lower risk so were less likely to purchase travel insurance when travelling to them.”

Demand has been driven by greater consumer awareness of risks such as war, terrorism, lockdown and travel agents going out of business, resulting in Singaporeans proactively safeguarding themselves against unexpected events.

“We see the same trends for corporate travel insurance, which is expecting returning demand as organisations in Asia ramp up business travel this year,” says Tan.

Morton says Cover-More is seeing an increased demand for cover for more extreme adventure activities such as black-water kayaking and ice climbing.

“I think that is a symptom of being deprived of travel and adventure during the pandemic, so Aussies are looking to accelerate their experiences before anything else happens,” she says.

Cover-More’s travel safety app has been downloaded more than 50,000 times since its Australian launch in 2022, signalling that customers want more information about where they are travelling, what is happening at a destination and how to access assistance if they hit trouble.

“The widespread implications of disruption caused by flight delays or cancellations and luggage handling problems have contributed to an acceleration in the adoption of real-time parametric flight disruption assistance and claims resolution for the travelling insured,” Carter confirms.

“Our 2023 half-year results show a 100 per cent renewal rate, 158 per cent increase in policies incorporating Blink Parametric technology sold, an 850 per cent increase in flights monitored and 250 per cent increase in claims paid.”

Carter also observes that business and domestic travel products have become more closely aligned, with customised service options providing timely support.

There’s no doubt that travellers want ease and convenience. They expect real-time services on demand and easily accessible via their handheld devices — plus, the immediate resolution of their insurance claims.

Chris Nam, chief of staff at online travel and health insurer Insured Nomads, asserts that consumers and distribution partners are also looking for actively usable resources that come with travel insurance.

“No longer are consumers wanting to purchase ‘add-on’ travel insurance that simply covers an accident or loss at the end of a check-out page,” he says.

All Insured Nomads travel and health insurance plans come with the company’s signature INC app, an all-in-one travel tool that features complementary mental health services, artificial intelligence (AI) travel concierge, cybersecurity and virtual private network (VPN), local and global news, push notifications to allow for quick alerts, SOS, and country guides.

“This allows travellers to actively use their ‘travel insurance’ rather than paying for something that they may not even use,” says Nam.

Tan adds that there are now online platforms for customers to easily compare travel coverage and prices between insurers. “There is overall greater transparency as contracts with policy wordings are available for review prior to purchase to ensure that consumers are fully aware of the protection offered in each plan,” she says.

Like Cover-More, Etiqa Insurance Singapore has made a significant investment in its Etiqa Connect online platform and mobile app Tiq by Etiqa, so that customers can easily access travel information, purchase policies and manage their travel insurance on the go.

“Our customers can now update their flight details on the app to receive pre-trip notifications regarding the airport terminal or luggage retrieval belt,” says Tan.

“With this information captured, customers no longer need to submit claims for flight delays, as these are automatically processed with payment made directly to customers through an e-wallet. Etiqa also uses AI to immediately process any small claims to reduce wait times.”

Despite the many benefits for consumers and insurers, digital platforms must still navigate evolving risks, some of which include cybersecurity, fraud, data leaks and lapses in regulatory compliance.

In addition, to remain financially solvent, indemnity insurers incorporate exclusions. For example, many insurtech travel policies do not provide cover for pre-existing medical conditions unless the insurer allows for opt-in coverage with an added premium.

Until recently, online travel insurance policies also haven’t covered travel to high-risk countries declared unsafe for travel or participation in high-risk activities such as extreme sports.

Carter argues for parametric insurance, which typically provides cover or real-time services for areas that aren’t covered or are excluded by indemnity-style policies.

“Our flight disruption solutions are sustainable, both in terms of integration costs and as a standalone or ancillary product, and they are affordable for consumers,” he says. “In practical terms, we work to help insurers deal with significant high-volume, low-value insurance claims coming through contact centres.

“The insurer can adjust consumer pricing depending on the delay period as well as the monetary value of the benefits delivered to the end customer. This allows the flexibility to hit certain consumer target price points based on the customer demographic.”

Meanwhile, Morton’s vision for travel insurance is to make it as critical to a journey as a passport.

“In 2020, we completed a state-of-the-art global command centre in Australia and followed with centres in Canada and the UK,” she says. “We augmented our existing in-house medical assistance capability with security services to proactively keep travellers safe from natural disasters, civil unrest or terrorist activity.”

Cover-More has also introduced travel risk management technology and platforms to its command centres, as well as geolocation and mobile apps for both leisure and corporate travellers.

If an insured is on a motorbike, the company’s Freely app can ‘sense’ it and send a prompt requesting the customer check their cover or purchase it straight away using the app, if necessary.
Tan says travel insurers will become more focused on environmental, social and governance (ESG) issues, while Nam points to quick, efficient purchase journeys and claims assistance as the future of travel insurance.

“We will see weather monitoring paying out in the event of rain, wind [and] snow thresholds being hit. This will be relevant to travellers,” he says. “In time, we’ll see ferry and road delays being monitored to provide solutions.”

Carter adds that consumer parametrics is an “underserved but rapidly growing area as adoption increases across primary insurance lines”.
“Travel insurance is a great use case for such services, due to the heightened stress levels when away from home and the ongoing volatility of global travel.”

Rather than incurring the costs and distraction of trying to build solutions internally, Blink Parametric allows travel insurers to retain focus on their core business.

The company has recently formed two strategic partnerships: the first with Firemelon, a platform that provides online insurance policy-processing services; and the second with Getcover, a provider of online direct-to-consumer travel insurance.

Blink Parametric chief commercial officer Carl Carter says the platform provides ease of access to Blink Parametric’s real-time parametric solutions. “In effect, Firemelon’s Magenta system is now Blink Parametric enabled,” Carter explains. “Firemelon’s Magenta platform powers around 70 to 80 per cent of direct-to-consumer travel insurance brands in the UK. Any Magenta-powered travel insurance brand can now simply ‘switch on’ Blink Parametric technology and benefits.”

Getcover is the first partner to access Blink Parametric-enabled technology using Firemelon’s platform.

Insured Nomads has recently partnered with Hotspot Cover, a provider of insurance cover for high-risk regions and activities, to create World ExplorerTM Hotspot — a series of travel products covering such areas as medical expenses, crisis response and catastrophe evacuation.

“There’s a need for the insurance market to start thinking of the people who go into danger zones and conflict areas … without having them look all over the internet for such coverage,” says Insured Nomads chief of staff Chris Nam.

“Our partnership with Hotspot opens more opportunities for people to find insurance coverage for entering these countries and zones, including Ukraine, North Korea, Russia, Afghanistan, now Israel, and more. The market has been seeing more journalists, news reporters, volunteers, military units and family members travelling into these areas.”