Travel Insurance, an essential holiday item, but one which is certainly more complex than people think.
Travel Insurance, an essential holiday item, but one which is certainly more complex than people think. With rock bottom prices being offered in a very competitive market, is the consumer getting what they pay for or more importantly what they need?
The simple answer is yes, they are getting what they pay for but not necessarily always what they need. We understand that consumers can be disappointed at the point of claiming against a travel insurance policy as the policy purchased predominantly on price, does not meet the expectations when it truly matters.
The gap between what customers expect and what they actually end up purchasing can be vast. Products heavily marketed on cover limits and price and branded as ‘best purchase’ or ‘value for money’ has created what can be a misguided confidence in a product which may or may not actually be what the customer needs. The focus to purchase predominantly on price, has created an environment where there are few beneficiaries, not least the customer financially when left out of pocket, but also the travel insurers reputations when their products are not considered to meet expectation, resulting in brand damage, lack of consumer confidence and strongly worded letters to their complaints teams. This results in the travel insurance industry being represented poorly, when the reality is there are some great products out there and firms who genuinely want to be able to offer products that are fit for purpose.
Our research has shown us, most people only read their policy terms and conditions at the point they think or know they need to make a claim, and it is only then that they realise that perhaps they do not have the ‘comprehensive cover’ they thought they had purchased.
Cancellation claims are one of the two leading causes of claims against a travel policy (the other being Medical Expenses). Generally speaking this is a section of cover that has remained unchanged across the industry for some time and with many insurers offering very similar terms and cover for this eventuality. Despite cancellation cover being relatively standardised across the industry we know that customers are still on occasion left disappointed that the cover they assumed they had has not materialised.
A good example of how easy it is for the consumer to be left without the cover required is where you have two people travelling together but insured separately.
Mark and Louise were travelling together to Costa Rica, both on the same booking but took travel insurance out separately. Louise had insurance with her bank and Mark bought a policy online that would cover him for his medical conditions as he suffers from Asthma and recurrent chest infections. Unfortunately a couple of weeks before they were due to travel Mark caught a common cold and because of his Asthma ended up with a severe chest infection, he was subsequently advised by his Doctor not to travel. Mark submitted his claim to his insurer who paid his proportion of the cost of the trip less his policy excess of £75. Louise however approached her bank, who like many in the market exclude ‘claims arising from pre-existing medical conditions’ unless declared and accepted by them. In this instance it is understandable that both Mark and Louise assumed that both claims would be paid, instead they were only reimbursed for Mark’s proportion as Louise’s insurer considered the claim to be as a result of Mark’s existing condition, a term no doubt outlined at point of sale and included the policy documentation, leaving them collectively only receiving half the value of their trip.
This is one of many misconceptions surrounding Travel Insurance. Whilst some may be able to afford to lose a few hundred pounds due to an oversight of lack of understanding of the product they have purchased, there are some cases where the price is far higher, with medical expenses claims in the USA often exceeding £50,000, the price of a ‘quick cheap buy’ can be costly.
It seems that this problem is unlikely to go away unless some fairly drastic action is taken to change the cycle of travellers seeking to buy on price and insurers reducing cover to be able to meet the price led demand.
tifgroup are focusing on doing exactly this and have created an education campaign called Travel Insurance Explained. A multimedia campaign, including a series of instructional and playful videos to engage travellers with messaging that helps educate them about the nature of their cover and what they can expect that most travel insurance policies will do for them. An insight into some of the standard travel insurance sections and what a traveller should expect if they buy on price alone, advice on what to check for as well as some tips and advice on travelling safely.
There are many different travel insurance products available, ranging in price, cover and excess – but unless customers are encouraged to make informed decisions, the market is likely to remain at stalemate with low priced products that do not, in all cases, perform as the customer expects. Budget policies offering travellers £500 cancellation for restricted causes will suit some travellers, however if consumers knew that policies such as Postcard Travel insurance exist and among other differentiators, offer cancellation cover up to £5,000 for any reason beyond your reasonable control and for the price difference of the cost of a couple of glossy magazines at the airport, would they choose a more appropriate cover? We would like to think so, as this will lead to more satisfied customers and a rightfully increased perception of the value of travel insurance.