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Taking the risk out of travel insurance sales

AGENTS’ share of the travel insurance market might have hit an all-time low but that is no excuse for retailers to give up trying to secure a sale.


In a report on the travel insurance market earlier this year, research giant Mintel said agents’ share of insurance policies sold is just 24%, down from 62% in 2000.


Anyone booking a holiday should take out travel insurance, because anything can go wrong – and often does – as our case studies on pages 66-67 show.


Agents who have just sold a holiday are perfectly positioned to know their client needs to take cover. Yet many people are walking out of shops without protection, preferring to look for a cheaper deal online or just hoping ‘it will never happen to me’.


According to Mintel, three million of the 23 million British adults who travelled in the 12 months to February 2006 went without travel insurance. And a Sainsbury’s Bank survey found Brits will spend an average £1,604 on their summer holiday this year, and take belongings worth £790 with them.


Yet 8% of them will not take any travel insurance, which means up to £4.19 billion worth of holidays and £2.06 billion of possessions will not be covered.


That’s a huge pot of travellers for agents to tap into. However, they can only sell insurance if they have passed ABTA’s Level One insurance exam and – under Financial Services Authority regulations – if they are also selling the client a holiday.


These restrictions have made things difficult, but not impossible for agents. Holiday Extras, for instance, has a new FSA-compliant website to which agents can refer clients who just want travel insurance.


They simply give the customer a leaflet with the website Quote-me-travel-insurance.co.uk and their ABTA number to quote when they take out the policy and the shop gets up to 15% commission on the sale.


The new system complements a telephone referral system launched in January 2005, which Holiday Extras said has secured up to 13% of some agents’ insurance sales.


According to Mintel, 1.5 million travellers who bought insurance didn’t have a clue what type of policy they bought, suggesting they did not understand the difference between long-stay and annual multi-trip insurance, for example.


They also need to consider insurance for commonplace, but potentially dangerous activities such as horse riding and white-water rafting.


But it’s not just clients who need to know what they are buying. Agents must also know their stuff if they are to impress customers and secure a sale.


To help, here’s a guide to the great insurance cover-up.


 



What to sell them: a single-trip policy. This covers the period of the holiday, usually at a per-person rate, but policies have reductions for couples, single-parent families and families – usually 2.5 times the adult premium – which covers two adults and any number of dependent children under 18.


Key contacts: this is travel’s top-selling insurance, so it is available from all the intermediaries, including Holiday Extras, Citybond Suretravel, Journeys Travel Insurance, Preferential, Rock Insurance and Select.


Premium: Citybond Suretravel charges £12.60 for 17 days’ cover in Europe, Rock charges £18 and Holiday Extras has a week’s cover in Europe for £20. Journeys has 14 days’ cover in Europe for £9.20; family cover costs £18.40.


 



What to sell them: annual multi-trip. Allows any number of overseas trips a year, but with a limit on the number of days away at one time. This can vary from 35 to 45 days or more.


Some policies include winter sports cover, on others it is an optional extra. There are special rates for couples, families and single-parent families. Some allow everyone named to travel independently, others require family members to travel only with the main policyholder.


Key contacts: as more people take holidays and short breaks, demand is growing. Check out all the intermediaries above.


Premium: Rock Insurance charges £27 for annual multi-trip cover in Europe, Holiday Extras has the same policy for £62.50. Preferential has worldwide cover for £57.78 and a family policy for £119.69. Journeys’ worldwide policy covers couples for £75.77 and families for £88.89.


 



What to sell them: backpacker or long-stay policies. For cover of periods of one to 12 or 18 months. Most backpacker policies have a cut-down option for young people travelling with few belongings.


Key contacts: Citybond Suretravel, Holiday Extras, Rock Insurance and PJ Hayman.


Premium: Citybond Suretravel’s gap-year policy for the 16-45s provides a year’s worldwide cover for £195, or £292.50, including £2,000 baggage cover. Holiday Extras has six months’ cover in Europe for around £132.


 



What to sell them: winter sports cover. Sold either as a stand-alone policy or as a bolt-on package to a standard travel policy. Additional benefits include cover for owned or loaned equipment, ski passes, piste closure due to lack of snow or avalanches.


Key contacts: Holiday Extras, Rock Insurance, Preferential, Citybond Suretravel.


Premium: Holiday Extras charges £40 for a week on the piste in Europe. Journeys doubles the single-trip premium – 14 days’ skiing cover in Europe costs £18.40.


 



What to sell them: activity cover. Available either as a stand-alone policy or for an additional premium on a single-trip scheme, it provides extra cover for all those activities you thought were fun, such as parachuting and white-water rafting, but aren’t covered by standard insurance, and others that can be downright dangerous such as potholing and hang gliding.


Key contacts: PJ Hayman, Holiday Extras, Rock Insurance, Journeys Travel Insurance.


Premium: PJ Hayman’s Adventures policy rates activities from one to four. Five days’ level two cover in Europe, which includes kitesurfing and bungee jumping, costs £13; five days’ level four cover, which includes canyoning and ice hockey, costs £21. Standard travel insurance costs an additional £11 per person.



  • Holiday Extras’ rates include 30% commission and 17.5% Insurance Premium Tax. PJ Hayman prices include IPT. Other rates are net to agents.

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