California Broker: Insurtech Makes this Untapped Market More Appealing

By Rajeev Shrivastava


Originally posted in California Broker Magazine on October 16, 2018


The opportunities for brokers to sell travel insurance are growing and made even more attractive with advancements in insurtech that make the comparison, selection and purchase of insurance simpler and less time-consuming. The emergence of third-party providers for intermediaries makes it easy for any licensed life and health broker to add travel insurance to current product portfolios.


The global travel insurance market is projected to generate $66.1 billion by 2022, growing at a compound annual growth rate of 4.7 percent over the next 10 years. Insurance intermediaries are forecast to be the highest revenue-generating market segment through 2022.


Insurance brokers will be the highest revenue-generating market segment through 2022 (Allied Market Research, November 2016)


The emergence of Insurtech providers for brokers makes it easy to add travel insurance to your product portfolio


About 15 percent of travelers experience some type of a medical incident (Consumer Reports, May 17, 2018). However, the majority of travel insurance policies are purchased for trip cancellation or interruption coverage (USTiA Market Survey, 2015). Overall, an increasing number of travelers are opting for comprehensive policy coverage for incidents such as medical emergency, lost luggage, flight delays and global incidents from terrorism or natural disasters.


As global travel continues to rise, a corresponding rise in travel mishaps will continue to plague travelers, prompting them to think twice about relying on their credit card to cover missed or delayed flight expenses, or their U.S.-based health insurance plan to cover them for medical emergencies while overseas.


Extend You Impact with Travel


Most Americans are lulled into a false sense of security assuming that their domestic health insurance policy will cover them when they are abroad. Your customers may not be thinking of services such as extended in-patient stays, ambulance transport, emergency medical evacuation or repatriation, which may run into six-figure expenses, depending on the country. And, the definition of what constitutes a medical emergency will differ with each policy, further increasing the likelihood that medical treatment claims may not be covered.


If a medical incident occurs abroad, all out-of-country claims must be paid out-of-pocket before being sent to the provider for reimbursement. This can be a financial hardship for many, and financial devastation for some if the incident is a catastrophic injury, heart attack or acute condition due to a pre-existing condition.


Global Travel Insurance Landscape


Driven by an uptick in overall global travel – rising 7 percent in the past two years (UN World Tourism Organization) – senior travel, increased business travel expenditures, travel insurance visa requirements and an unquenching thirst for adventure travel – the travel insurance market does not give any indication of slowing down.


Unlike other types of insurance policies, over 71 percent of travel insurance purchases are one-time expenditures with an average coverage span of 10 days. The general trend in travel is people are taking more frequent trips of a shorter duration instead of opting for one, extended yearly vacation. And, for frequent travelers, multi-trip policies are on the rise (Allied Market Research, November 2016).


As global travel and business travel expenditures increase amidst a backdrop of natural disasters such as the eruption of Kilauea, the increased threat of terrorism, and an overall increase in leisure travel – more and more travelers will be opting for comprehensive travel health insurance.


While single trip policies continue to dominate purchases, multi trip travel insurance policies are expected to be the fastest growing travel insurance category through 2022 (MarketResearch.biz, November 2016).


Your customers may not be thinking about unforeseen travel expenses like these:


  • Ambulance transport
  • Emergency medical air evacuation
  • Repatriation
  • Lost or stolen passport
  • Border entry denial
  • Terrorism
  • Kidnapping, ransom

Travel Insurance Can Make a Dream Vacation


Some homeowner’s and renter’s insurance policies cover theft of personal belongings while abroad, but do not include coverage for immediate cash disbursement due to incidents such as lost luggage or a lost or a stolen passport.


Travel insurance Market Segments


Not accounting for business travel insurance expenditures, seniors and millennials purchase the most travel insurance (AARP Research, November 2016). This may be somewhat surprising given the social media-addicted perception often thrust upon this younger demographic. GenXers, most with families and heavy career demands, round out the coverage purchases.


Seniors: Golden Opportunities


Senior Baby Boomers are most likely to have disposable retirement income allowing them to travel more often, and for longer periods of time. They are also the market segment most likely to have pre-existing conditions such as diabetes, hypertension and heart conditions, providing an opportunity for the purchase of additional policy riders for acute onset of pre-existing conditions.


An acute onset of pre-existing conditions policy covers any acute episode related to the condition, such as a diabetic having severe hypoglycemia or a ketoacidosis episode. The policy rider would cover an acute episode, but would not include routine care, treatments or medications for any pre-existing condition.


Medicare Coverage Abroad?


Medicare only covers subscribers while within the U.S. As many health and life providers know, some Medicare supplemental plans offer worldwide emergency care – but for travelers with pre-existing conditions, a comprehensive travel insurance policy and a separate policy rider is essential to provide peace of mind while traveling.


The opportunity for selling traveling seniors comprehensive travel insurance policies, acute onset of pre-existing conditions riders and supplemental Medicare policies that cover medical emergencies abroad could not be brighter.


Millennials: Glued to their smartphones and ready for adventure


Millennials aren’t waiting for the golden years to start checking off their bucket list. Gone is the quintessential backpacker on a Eurail pass. Today’s millennial travelers build adventure, ecotourism and extreme sports into their vacations. They want all purchases to be mobile-based, seamless and completed in minutes. They are a huge driver of advancements in insurtech and travel insurance purchasing technology.


They purchase travel medical coverage, enjoy lower rates due to their age, and typically add a hazardous sports rider to their comprehensive policy if they know they will be participating in adventurous sports activities.


Millennials and adventurer travelers offer a life and health broker the opportunity to sell pricey travel insurance riders for extreme sports coverage activities such as scuba diving, skiing, snowboarding and snowmobiling. Many providers do not cover all hazardous sports – bungee jumping, kayaking, mountain biking, river rafting, ziplining, mountain-climbing and mountaineering are a few activities that may only be covered by a handful of providers.


A hazardous sports rider is often sold with a larger, comprehensive package that includes emergency medical air evacuation, ambulance transport and repatriation in the case of severe injury or death. Brokerages in an active state like California are more likely to have a market for adventure clients. Offering amended general exclusions that will cover these typically-excluded activities can prove financially beneficial.


Executive Travel Insurance: Not just table stakes


Business travel insurance policies are driven by the same needs as tourist travel, but the stakes are much higher. Business travel insurance expenditures accounted for the highest revenue share in the 2017 global market. A missed flight could mean millions to a company on the cusp of closing a deal, and for an executive with lost luggage, the immediate replacement of toiletries and clothing require coverage and cash reimbursement that is fast and efficient.


Business travelers purchase multi-trip or annual travel insurance policies for frequent trips. For those doing business in unstable or developing countries, terrorism insurance and increased medical coverage for infectious or tropical diseases may be needed. Many companies opt for kidnapping and ransom policy riders should a senior employee be seized. Business travelers offer a stable and profitable customer base to a brokerage selling travel insurance.


Family Travelers: The oft-forgotten GenXers


Family travel insurance policy purchases are made largely by GenXers. This generation may still be paying student loan debt and is most likely to have a family with younger children. These travelers are likely to have substantial life insurance coverage and would be inclined to purchase comprehensive travel coverage to avoid financial calamities.


Many travel purchases made by this generation are often from first- or second-generation immigrants who host their parents or other relatives from abroad or take an extended visit for as long as their visas allow.


The travel insurance market is booming – any licensed health and life broker can expand their customer base with minimal onboarding, and property and casualty brokers need only secure an additional license to add travel insurance to their portfolio. With such a huge market growth potential, it makes sense to consider adding travel insurance coverage to your brokerage portfolio.


An untapped market: Insurance coverage for your customers


For brokers with an established health and life practice, adding travel health insurance can provide an immediate revenue boost. This can be significantly increased by extending U.S.-based coverage for parents or other relatives while visiting or coming for studies in the U.S.


Why your customers should purchase a U.S.-based travel insurance policy for visiting relatives:


  • Most non-U.S. citizens are used to some level of government-provided health care and do not realize the huge financial risk of not being covered for medical emergencies while traveling to the U.S.
  • Many non-U.S. travel insurance providers require a medical exam before issuing coverage.
  • Non-U.S. travel insurance providers may decline any coverage at all for applicants in their 70s and 80s.
  • Policy maximums may not be as high as younger applicants, but the potential for financial devastation from a medical incident far outweighs the risk of not having any coverage at all.

Read the full article on the California Broker Magazine website.


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