By Graeme Dean, head of insurance at Cover Genius
Holidaymakers this summer are leaving themselves particularly vulnerable to accidents and mishaps while abroad.
According to recent research from Abta more than a third (38%) of travellers were yet to buy holiday insurance for this year’s summer vacation.
That’s up to 8.6 million people leaving themselves at risk. Of uninsured customers who had to pay additional costs because something went wrong while they were on holiday, 34% had to spend between £500 and £4,000 to put things right.
Customers surveyed by Abta said that they didn’t think they needed travel insurance (37%) and more than a quarter (28%) said it was a risk they were willing to take.
Clearly, customers no longer recognise the value of travel insurance and have little faith in insurers and their products. This notion is supported by Cover Genius’s own research.
In a survey of 2,000 people, we found that customers ended up waiting an average of 10.5 weeks for claims payments.
And 35% of customers said that delays in payments is the worst thing about making an insurance claim.
Our research also showed negative customer attitudes and expectations towards insurance providers.
Some 9% of customers have very little faith in their insurers, and don’t expect to get anything back when they claim on their insurance.
A further 18% said making an insurance claim is harder than it needs to be. This difficulty is taking an emotional toll on customers, negatively affecting their work and putting a strain on their relationships.
A customer-centric approach to travel insurance
It’s no secret that customer service and the travel and hospitality industry go hand in hand.
When investing in some relaxing time away from the 9-5 grind, customers want to know that they’re going to be well looked after.
While travel brands know the importance of investing in the customer experience, travel insurance providers still have some important lessons to learn – the overriding lesson being the importance of customer-centricity.
Our research found that the claims process is such a sore spot that, in fact, 30% of travel insurance customers would pay more for instant claims payments.
Insurance providers can build on this knowledge, and use technology to create a more customer-centric offering.
Indeed, those that are already tapping into tech-powered solutions, such as the fast-growing insurtechs, are notching up greater customer satisfaction scores than incumbent insurance firms.
If a customer needs to claim on their insurance, it’s always because something’s gone wrong.
This could be something as inconvenient as lost luggage, or as distressing as a serious illness or accident while on vacation.
While insurance can’t stop things going wrong, timely claims payments can ease the difficulty.
Ideally, insurance firms should use an instant claims payments system that automates remittances across currencies, languages, and global legislation.
While such tech does exist, the challenge is with adoption. Many insurers still rely on manual processes to input bank details and approve payments resulting in delays and errors.
Where Abta’s research reveals that customers are rejecting travel insurance because they believe they don’t need it, technology can actually make insurance hyper-relevant to the customer.
AI-powered quote and e-commerce engines allow insurers to optimise product recommendations.
By only receiving appropriate products, customers can have faith that their insurers understand and care about their needs.
Particularly savvy insurance firms can offer customisable insurance packages, enabling the customer to tailor their cover to their unique needs.
Travel partners: what to look out for
Change is coming for the insurance industry, and the time will come when incumbent players have no other option but to put the customer at the heart of their operations.
However, change can’t happen overnight. Until then, travel brands can maintain their commitment to premium service by ensuring any insurance partners prioritise the customer experience — perhaps through clever use of tech.
In the first instance, travel service providers must look for an understanding of the customer-first mentality among insurers.
Our research found that customers making an insurance claim are subject to suspicious treatment from claims operators (22%), repeatedly asked to provide the same information (24%), and required to chase the status of claims in order to get a response (24%).
If travel brands are trying to add value to customers with an insurance partnership, they should prioritise preferred partners that can offer instant payment of claims in multiple currencies.
Firms that get the claims service right typically have higher NPS scores, so this is a useful metric. Look for customer satisfaction scores in the 70s (global incumbents can have low scores ranging from -5 to 10).
For travel brands that get such insurance partnerships right, there is great potential for reward.
In the first instance, creating a frictionless, customer-first approach will make for happy customers, which in turn provides the potential to increase customer loyalty.
This is not just a luxury: acquiring new customers costs 500% more than repeat business. Likewise, repeat buyers are likely to spend 33% more than first-time customers.
And finally, let’s not forget there’s an added bonus too for travel brands, as adopting a strategic insurance partnership can enable them to collect ancillary revenue.