Written By: Robert Gallagher, Senior Vice President and Chief Operating Officer, AIG Travel
It should come as no surprise to sellers of travel that over the past several decades, the travel industry has become of one of the most universally dynamic industries in the world. In fact, according to the World Travel & Tourism Council, 284 million people – or about 10 percent of the global job market – are in some way employed by the travel industry. Those who aren’t selling travel, are consuming it, taking full advantage of the affordability and the increase in air, cruise and hotel capacity. Air traffic has reached record heights of late. For many experts, 2016 underscores the staying power of this trend as travelers around the world demonstrate their resilience and a continued commitment to travel despite a heightened perception of challenges to travel affecting a variety of destinations, including terrorist activity, outbreaks of infectious disease and instances of social unrest.
Accompanying the explosive growth in travel are an ever-increasing number of new destination, accommodation and technology options for a new breed of travelers. Adventurous travelers are enjoying changes in government policies and now visiting destinations, such as Cuba and Myanmar, which were previously more difficult to visit. The sharing economy has provided travelers the means to “live like a local” and venture “off the beaten path” at their destinations of choice. While exciting, these developments have also introduced unprecedented “unknowns” into the travel equation; for which many travelers, are inadequately if not entirely unprepared to manage. According to the U.S. Travel Insurance Association, one in six travelers will have their travel plans adversely affected by medical situations, natural disasters, severe weather occurrences or transportation delays and cancellations; however, less than 25 percent of those travelers will have purchased travel insurance to help them deal with the financial and logistical impact of unexpected events. Those without travel insurance are left to fend for themselves, at risk of the smallest mishap or significant event, all of which can dampen if not ruin their long-awaited trip.
One can attribute this relatively low adoption of travel insurance in large part to a general lack of awareness about the value of travel insurance. Many travelers don’t necessarily think about the multitude of things that can go wrong. In addition to interrupted or cancelled trips and lost or delayed luggage, many travel insurance policies include coverage for medical emergencies caused by sudden illness or an accident, and medical evacuations (which internationally can cost upwards of $50,000). Many travel insurance plans also offer travel related services such as 24/7 travel assistance to help with the re-booking of flights, hotel accommodations and more. Even those travelers who do appreciate that an endless number of circumstances could trigger a need for travel insurance benefits and related services, may have other misconceptions that prevent them from purchasing a travel insurance policy. Sometimes, exposing and dispelling “myths,” such as those listed below, is all that’s needed for a travel seller to convince a reluctant customer of the significant benefits to travel insurance and ensure that customer is well positioned to get the most out of their travel plans:
- Their credit card covers them: Many consumers don’t purchase travel insurance because they believe coverage from other sources fully protects them in the event of a travel emergency or mishap. For example, credit cards, which often promote their travel protection benefits, typically offer more limited coverage. While they may offer base coverage for lost or stolen items or trip cancellation (assuming your customer purchased their travel with the card in question), many have low coverage limits, and very few offer any sort of coverage for medical emergencies or evacuations abroad (often, the priciest contingencies travelers may face).
- Their medical coverage travels with them: Many consumers don’t realize that while they may have great health insurance here in the U.S., many or all of those benefits may not apply the moment they leave the country. Even plans that offer some level of coverage abroad are unlikely to cover emergency evacuations in the case of a catastrophic event. Passengers who think coverage for this scenario is only necessary when undertaking some risky activity, such as mountain hiking or zip lining, should think again. Travelers may need to be evacuated for even relatively minor issues if proper medical staff isn’t readily available.
- A basic travel insurance plan will cover everything: Many travelers don’t realize that not all insurance programs are created equal. Many basic plans don’t include a full range of benefits which cover extraordinary instances. In addition, some basic plans may carry exclusions that would surprise travelers. Travel sellers should encourage their customers to read and review their policies, and if additional protection is desired, encourage them to consider upgrading their coverage. For example, a “Cancel for Any Reason” plan, as the name suggests, allows travelers to cancel their trip for any reason that is not otherwise covered by a basic plan.
- Travel insurance is expensive: For many consumers, travel may already be an expensive proposition and tacking on added expenses like travel insurance can feel prohibitive. While the cost of travel insurance can vary significantly depending on the provider, the desired coverages and services, and the cost of the trip, there is one common element of travel planning in that accidents and unforeseen events happen, and for the one in six travelers who experience them, travel insurance may very well pay for itself. Those lucky enough to not need their travel insurance coverage, may still experience added benefits, such as 24/7 concierge services, offered by some providers, as well as the freedom of knowing that, if the worst were to happen, they’d have financial protection and the guidance and expertise of someone who’s likely dealt with the situation before.
While dispelling travel insurance “myths” is a key to successful selling, smart travel professionals may also want to look ahead to the following four travel trends, and consider how they – applied to a strong existing sales strategy – may have the potential to boost their revenues and selling power in 2017:
- Limited Lines Travel Insurance Model Act: In 2012, a coalition including the American Society of Travel Agents (ASTA), the U.S. Travel Insurance Association (UStiA), and insurance regulators and legislators introduced the Limited Lines Travel Insurance Model Act, designed to reduce the licensing barriers travel sellers must overcome in order to offer travel insurance to their customers – for example, the act would remove the requirement that agents who sell travel insurance must be licensed in the state in which the policy is sold. The law has been passed in a majority of jurisdictions, enabling more travel sellers to offer travel insurance to their customers, albeit subject to a number of limitations. Travel sellers should weigh the pros and cons of full licensure versus this easier but more limited option and make the best decision for themselves and their customers.
- Travel Risk Management: While travel risk management has long been a widely-discussed trend in the business travel sphere – where globalization has spurred companies to send more and more of their employees overseas, often for long periods of time and to potentially risky locations – the concept is now also making its way to the leisure space. On the business side, the general idea is that businesses have a “duty to care” for their traveling employees by offering value-added benefits, such as travel accident and assistance insurance, to minimize their personal risk. This translates to the consumer side via the thought that travel sellers have a duty to inform their clients both of potential risks they may face abroad and of ways to mitigate those risks. Not only is this thought of as the right thing to do, but it’s also increasingly necessary to minimize potential legal liability resulting from not making such options clear enough to customers. In 2017, travel sellers should be aware of this evolving trend, and consider value-added services – such as pre-trip advisories, real-time incident tracking and other alerts offered by travel insurance partners to minimize their clients’ risk.
- One-Stop Solutions: It’s no secret that rapidly evolving online and mobile platforms have –
for better or for worse – forever changed the travel selling landscape. What it’s also done, however, is accustom customers to immediate and integrated solutions for just about everything. When evaluating potential travel insurance providers, travel sellers and their customers should be looking for a service that “does it all.” Some important items on the check list include:
- Knowledge and expertise in the “business” of travel insurance – a consultative partner who can structure your travel insurance program.
- A full range of trip types and travel styles.
- A track record of service excellence (after all, the service your partners provide your customers is an extension of your own).
- Universal capacity to pay claims.
- Global infrastructure to take care of your clients anywhere in the world.
- Sustainable travel: Otherwise referred to as Ecotourism or Green travel. Whatever term you use to describe it, travelers are increasingly expressing an interest in making sure their travels have a neutral to favorable impact on the cultures, economies and geopolitical structures of the places they visit. However, according to a recent AIG Travel poll, while 52 percent of travelers say it’s important to travel sustainably, more than one third (35 percent) report difficulty doing so. In response, AIG Travel recently partnered with Tourism Cares to help travel sellers respond to this trend. The new online training and certification program for travel agents, launched at the ASTA Global Convention in Reno, Nevada on September 26, educates travel sellers to “help travelers give and volunteer better, creating powerful experiences and connections while improving the impact of their contributions.” Similar to an offer of travel insurance, knowledge from this course when shared elevates the travel seller’s value proposition and in turn, strengthens their relationships with their clients.
Robert Gallagher is Senior Vice President and Chief Operating Officer of AIG Travel. In his role, Robert assists with the development and execution of AIG Travel’s global business plan. He also manages AIG Travel’s relationships with Travel industry organizations and serves as the business leader for Travel acquisitions, joint ventures and other corporate development matters.