ITIC UK: Travel insurance consumer expectations and understanding – how have they changed?


Karen Houseago, Head of Insurance, Consumer Intelligence (CI)

Karen’s presentation began by pointing out that according to Consumer Intelligence’s research, seven out of 10 people in the UK haven’t been on holiday since before March 2020, but the same number would like to go on holiday in the next 12 months.

“Not only are a large proportion of people going on holiday this year, but they’re also more likely to purchase travel insurance,” said Karen. According to CI, 58 per cent of people said they are more likely to buy a policy as a result of the pandemic. Only a small proportion of those holidaying in the next 12 months (just seven per cent) say they won’t be taking out travel insurance, either because they can’t afford it or don’t think they need it. 38 per cent of respondents said they plan to buy insurance, but haven’t yet done so, meaning there is still volume in the market for travel insurers.

CI also asked consumers about the triggers that make them buy insurance for their holidays, finding that the most important aspect is the cover the policy provides, followed by the brand, and then the price. Moving on, Karen identified what consumers are expecting from their travel insurance policy, and interestingly, Covid-related cover ranks lower than most traditional aspects of travel insurance, such as repatriation, cover for loss/damaged items, medical expenses and cover for cancellation and missed departure (including Covid-related cancellations).

“However, things get interesting when you ask consumers to rank the same cover in order of importance,” said Karen. “Even though their expectations of Covid cover being included are lower, the importance they place on these cover features rank pretty high.” Most important was repatriation in the event of an accident or injury, followed by medical expenses excluding Covid, then medical expenses including Covid and getting home after being infected with Covid.

Trust is a thorny issue for consumers and insurance, but it seems like the tide is turning in the right direction, with CI research showing that in response to the question: ‘Do you trust your travel insurance provider to pay out in the event of making a claim’?, 79 per cent of consumers said yes. And, when asked if they believe the level of cover offered by their policy is fair in relation to the premium paid, 88 per cent said yes. Putting the issue of trust into context in terms of how travel insurance is viewed as an industry, the finding is less positive, with CI showing that travel insurers and travel operators rank only just above Media and the Government. “If you don’t deliver on your promise and catch those customers when they fall, then you could end up at the bottom of the list again,” concluded Karen.

Consumer understanding of insurance remains patchy, because while the majority of people are confident their policy includes covid cover, particularly medical cover and cancellation/curtailment cover, CI found that only 31 per cent of people have read the fine print of their policy.

Karen concluded by saying that with people’s desire to travel is a golden opportunity for the travel insurance sector, and it’s a chance to mitigate reputational risk: “This is the year to get it right,” said Karen. “If you don’t, the macro level trust in the travel insurance industry could drop.”

Simon Calder, Travel Correspondent, The Independent

Simon’s presentation represented the consumer, and talked about how the consumer interacted with the travel sector over the past two years, identifying (the many) pain points in the consumer journey that have been experienced during the pandemic. Simon pointed out the confusion travellers suffered regarding the constantly changing travel rules they were subject to, with the UK having the most confusing, expensive, and onerous travel rules for some time.

Barriers to recovery for the travel sector, continued Simon include changing rules for passport regulations and airlines misleading customers with regards to the people who have been wrongly denied boarding due to the fact that their passport doesn’t have six months’ validity post travel, with Simon saying that in reality, it only has to be three months’ validity, but there is so much misinformation online that consumers are believing what they see. He believes that airlines, however, could soon be culpable for a significant number of claims from customers who have been wrongly denied boarding in such situations. Other barriers to recovery in the travel sector include the Russian invasion of Ukraine, and border crossings from UK ports.

However, people are travelling once more in big numbers, said Simon. Conversely, people are keen to read about holidays being cancelled and flights going wrong – thousands of customers are suffering cancelled flights on a daily basis due to staff shortage thanks to Covid, and these stories are frequently the most read stories on The Independent’s website. Meanwhile, Australia is making an appeal for temporary workers through its working holiday visa scheme, with offers of £10 flights for workers who fit the profile, showing how desperate the situation is for the travel and tourism sector in terms of a global shortage of workers.

Sian Brightey, Ombudsman Leader & Leah Nagle, Ombudsman Manager, Financial Ombudsman Service (FOS)

Sian and Leah’s presentation looked at travel insurance complaint volumes and themes, as well as offering insights through case study examples of the cases they have been working on. “The impact of Covid-19 on case volumes has been clear,” they said. In 2020/21, the FOS saw 8,175 converted travel insurance cases, while in 2021/22, there has been 2,120 and a complaint uphold rate of 42 per cent, which is higher than the previous two years. “The increase reflects the novel issues and constantly emerging trends faced by both the travel insurance industry and the FOS,” they said. Looking at how the FOS dealt with the increasing volume of complaints, the FOS established internal cross-product working groups, increased engagement with key stakeholders and industry, and published a ‘key approaches’ document online.

The primary themes of the complaints seen by the FOS include premature cancellation of flights and holidays, ‘uncooperative’ travel agents, travellers being offered vouchers or the chance to rebook a flight or holiday instead of refunds, extended stay claims and premium refunds, as well as referrals to legal expenses insurers, policies that have a ‘gap’ in cover for changes to governmental travel advice and the definition of ‘essential’ travel.

Looking forward, the FOS considered how the travel insurance landscape might change in the future, the effect of companies withdrawing from the market, the impact of the Financial Conduct Authority’s Consumer Duty proposals, misrepresentation at point of sale and mid-term changes in material risk due to the health of the insured changing, and the effect of aggregator website sales on travel insurance premiums and coverage.


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