As the New Year bookings start coming in, it is very interesting to see what is happening with respect to insurance sales.
We have noticed that, as ever, there is a very small take-up of Sunvil’s insurance from customers who book through travel agents.
This is, of course, quite understandable because it is far more profitable to make 30%-40% on insurance rather than exist on a standard tour operators commission level.
It is also very clear that many agents are now using free travel insurance as an incentive to get clients to book. You can hear them offering this on the phone while making the booking.
There are certain facets of this strategy that worry me.
Last year we negotiated as part of our travel insurance a special deal whereby compensation for a delayed flight kicked in after just 6hrs rather than the usual 12hrs.
Those clients who took out our policy were able to put in an insurance claim at a far more frequent rate than those who organised either their own or bought a standard policy from a travel agent.
It led to a fair amount of ill will because clients who had not purchased our policy felt that they had been hard done by.
This year our policy has no excess clauses. This again is something that Sunvil has negotiated but I doubt very much whether any client booking at a travel agent will ever realise this is the case and that if they should have a claim, no matter how small, the claim will be met without any excess sum deducted.
It is quite understandable that a travel agent wants to sell his own policy and it is very rare that clients bother to read what cover is being provided.
I am not sure where this leaves the consumer. The whole process of taking out insurance and comparing one policy to another is so time consuming it is unreasonable to expect the travel agent to offer to compare a policy which can be bought by the client direct, with one offered by the tour operator or that offered by the travel agent.
It therefore seems to me that the whole matter really is down to the person booking and that the person booking has to take responsibility for the choice.
If the customer takes out a policy which is inadequate for the holiday being booked, then they can only blame themselves if something goes awry.
I suppose consumer groups would argue it is the duty of the agent to make the comparison if the holiday is being booked through them.
If that were the case, each booking would take so long the cost of booking a holiday would escalate.
Unfortunately, the industry has a system that perpetuates mediocrity and there is very little that anyone can do about it.
Such is the public’s passion for paying as little as possible for anything that is travel-related, and so competitive is the industry, there is no doubt in my mind that we don’t do the best for our clients.
Margins are far too tight and that is not good news for the travel industry or for those who buy our products.
In the end you get what you pay for – the travel industry is no exception.