This article was originally posted in California Broker Magazine on January 2, 2019
By Rajeev Shrivastava
The global travel market continues to grow despite headline-making natural disasters, increased flight disruptions and the threat of terrorism. Travel agencies reported an 80 percent increase in international travel in 2017, and that figure is expected to be met or surpassed for 2018 due to cruise travel, adventure travel, senior and millennial travel.
Foreign travelers know that their government-sponsored health care systems don’t extend coverage out-of-country and overwhelmingly purchase visitors travel insurance when traveling to other countries. This is especially true when visiting the U.S., where private health insurance is the norm and treatment rates are the most expensive in the world, but Americans purchase travel insurance at about half that rate. From a world view, the costs of treating uninsured travelers from other countries through national Medicare systems is creating a growing push for mandatory travel health insurance coverage, which will likely spill over into the U.S. over the next few years.
Despite record flight delays, lost luggage and plans to engage in risky sports or adventure activities, only 46 percent of US travelers opt to purchase travel insurance when venturing abroad [Travelmarket Report]. In contrast, an average of 80 percent of foreign travelers always purchase visitors travel insurance after booking flights and accommodations.
The market opportunity with insurtech-based intermediaries
With a CAGR of 4.7 percent through 2022 for travel insurance purchases [Marketresearch.biz], brokerages that provide health and life insurance to families, singles and seniors owe it to their clients to review health insurance policies and coverage before venturing out of the U.S., and to offer travel insurance to their base.
Third-party intermediaries, driven by the Insurtech boom, make it easy to add travel insurance to a brokerage’s portfolio, allowing brokers to offer comprehensive travel insurance coverage to their clients while abroad. Adding travel insurance to your portfolio does not require an additional license or test, and insurtech-based third-party intermediaries offer technical, turn-key solutions that require no IT expenditures for the brokerage.
Americans live in a travel insurance fairyland
Americans largely believe that their U.S.-based health insurance will cover them for emergencies while abroad and that the credit card they used for purchasing flights will cover any flight cancellations, delays or lost luggage. Many end up with these beliefs shattered if they become severely injured or ill while traveling and unable to be medically transported back to the States – or when a natural disaster or global incident occurs before or during travel, forcing them to purchase a new flight, or leaving them stranded in the middle of a disaster, with all expenses out-of-pocket.
Like all growth industries, consumer education is key to create an informed traveler who clearly understands the need for travel insurance and the various coverage options available.
Only 46 percent of U.S. travelers opt to purchase travel insurance when venturing abroad [Travelmarket Report], despite record flight delays, skyrocketing numbers of lost bags and plans to engage in risky sports or adventure activities – AAA Travel has that figure even lower, at 38 percent for international travel. Travelers from other nations purchase their flights and accommodations, then immediately purchase a travel insurance policy that includes travel medical insurance and other options.
It is important to educate American travelers now on the importance of securing comprehensive travel insurance coverage as many countries are seriously considering mandatory travel medical coverage to all visitors, much like the Schengen visa
Most travelers opt for only flight delay or cancellation coverage through their credit card. U.S.-based life and health brokerages have a lucrative opportunity to offer comprehensive travel insurance plans that include these primary areas of coverage, and many more options:
- Travel medical insurance – covers your client for illness, injury, hospitalization or surgery until they are stabilized and ready for repatriation.
- Trip insurance – covers your client for flight cancellation and delays. Trip insurance covers emergency medical transport, emergency evacuation and repatriation, even family reunion while abroad and the return of minor children to the U.S. should a parent be too ill or injured to be transported. Pet evacuation is also offered by some providers.
- This travel insurance also covers your client for lost or stolen baggage, lost passports and emergency replacement items such as toiletries, clothes, medication and passports.
Educate Travelers on the Myth of Credit Card Trip Insurance
Unless your client carries a black American Express – which will transport you back to the U.S. if severely injured or ill – without travel insurance, your clients will not be covered for major medical treatments nor any medical transport or repatriation should they fall severely injured or ill while abroad, or worse yet, need repatriation of remains back to the United States.
Every U.S. traveler who purchases an airline ticket online encounters pop-up boxes selling travel insurance, typically from only one travel insurance provider. Many U.S. purchasers skip right over these options, confident that the credit card they used for purchasing the flight will cover any delays or cancellations. While that may be true depending on terms and restrictions, most neglect considering comprehensive trip and medical travel insurance. There are ‘cancel for any reason’ policies that are becoming quite popular – as cancellation reasons often have to fit the credit card company’s exact terms, which can be limited.
It is the health insurance agent who must caution clients traveling abroad to purchase travel insurance. While some emergency treatments may be covered by U.S.-based health insurance, this is never true for seniors on Medicare – although some senior supplemental policies may offer limited coverage, no U.S.-based health plans offer emergency medical transport, emergency medical evacuation or repatriation, which are only a few of the many incidents a travel insurance policy may cover.
Make 2019 a Banner Year By Adding Travel Insurance
Life and health agents make sure their clients’ health is protected and that their clients’ loved ones are taken care of when they are gone. It makes sense to ensure they are safe and protected when traveling outside of the U.S. By adding travel insurance to your portfolio, you will be adding value to the services you provide, while enjoying a lucrative revenue stream for your brokerage.
Life and health brokers are in a unique position to offer travel insurance as part of their portfolio and educate their clients on the importance of purchasing a comprehensive travel insurance policy any time they venture abroad.
Mandatory travel insurance coverage for border entry is on the horizon
The cost burden of medical care for uninsured travelers in other countries has led to a serious debate of requiring mandatory travel health insurance, much like the Schengen visa requirements. The Schengen area consists of 26 European countries who require minimum mandatory travel insurance coverage to obtain a Schengen visa. Travelers to these countries must show proof of at least €30,000 of travel health insurance coverage.
Countries such as Australia have reciprocal Medicare agreements with other countries that allow medical treatment for citizens from each country, but, with uninsured travelers from non-reciprocal countries racking up hundreds of millions in medical treatment costs, there is a push for mandatory travel insurance. That push is also in the U.K. and Ireland (both non-Schengen countries), for mandatory medical travel insurance. Expect the U.S., driven by economic analysis, to seriously consider mandatory visitors coverage in the near future.
In 2012, over 1 billion people crossed international borders for the first time to experience other countries and cultures, not as a result of a humanitarian crisis or conflict.
- Over the next 10 years 1.8 billion people will cross international borders for travel
- By 2025over 180 million households will travel internationally
The hottest travel insurance markets for 2019
Seniors, millennials, solo female travelers and ‘bleisure’ travelers will lead the explosive growth of the travel insurance industry in 2019.
Senior travel – frequent travelers with pre-existing health conditions
99 percent of baby boomers will take at least one, and typically up to five travel trips each year, and 45 percent of this travel is international [AARP]. Millions of Americans, mainly seniors, travel with pre-existing conditions such as diabetes, heart conditions and hypertension, which require special policy riders even when these travelers have the foresight to purchase a travel insurance policy. Visitors insurance for parents visiting the U.S. is on a solid growth trajectory as their children want to avoid financial calamities should their aging parents need expensive medical treatment while visiting the U.S.
Millennials – demand seamless, mobile-based transactions
Millennials want experiential and adventure-based travel that entails engaging in risky sports activities such as zip lining, parasailing or surfing. These require a hazardous sports rider, in addition to a comprehensive medical travel insurance policy that includes evacuation from remote areas. Their purchases are overwhelmingly via mobile, making it crucial that a third-party travel insurance provider is insurtech-based with a seamless client interface and the ability to compare and purchase travel insurance policies within minutes.
Female Solo Travelers – the lucrative health and wellness demographic
Over 32 million American women travel alone every year, and that figure is rising as the travel industry continues to cater to this lucrative demographic [Travel Industry Association]. They seek out cultural sites, health and wellness destinations and adventure travel. Over 80 percent of female travelers consider themselves health- and wellness-driven. This demographic spends 130 percent more on total travel expenditures.
Bleisure travelers – adding leisure trips to their business travel
Business travel insurance accounts for the market share of all travel insurance policies purchased and will continue to grow at a CAGR of 5 percent through 2026 [Marketreseaarch.biz]. Many business travelers opt to add on a few days or a week of personal travel time when they have business abroad. Multi-trip travel insurance policies are an attractive option to ensure they are covered when the business portion of their trip is completed. Corporate business travelers are also an attractive market for travel insurance coverage for kidnapping, ransom, terrorism and emergency evacuation from corporate locations in global hotspots, and quarterly insurance policies.
Read the full article on CalBrokerMag.com.
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