Still plenty of mileage in travel insurance

Viewpoint

According to the NOP/Mintel (travel insurance survey, March 00) report, six out of seven consumers took out travel insurance for their last trip abroad. This leaves an estimated 15% of travellers who are uninsured, rising from 12% in 1998. Considering the potential consequences of

The cost of medical treatment abroad without cover can lead to astronomical bills; the replacement of lost or stolen goods or the cancellation of holidays can also prove costly - more than most of us can afford to bear.

The breakdown of where consumers are purchasing their insurance can be drawn from the Mintel report. The outstanding provider of travel insurance is still the travel agent and tour operator at 70%, decreasing from 78% in 1998. Direct insurers are the next largest provider at 14%, insurance brokers at 5% (rising from 3% in 1998), banks and building societies at 4% and other distribution channels at 7%.

The market as a whole is worth an estimated L555 million. Due to media attention, consumers are becoming increasingly aware of the high price of insurance through travel agents and are more likely to shop around for quotes. However the choice of providers, cover and costs can seem daunting.

New entrants have flooded the market in recent years, offering increasingly low premiums in the battle for market share. This is where the insurance intermediary has a significant opportunity. With lower prices than many distributors, and expert knowledge, they can make recommendations based not solely on price but also fan the quality of the cover.

The last few years have seen a downward pressure on travel premiums - a trend which Fortis Insurance does not believe is sustainable. We are now beginning to see some mergers within this market, and some companies are experiencing difficulties. We have over 35 years of experience in the market, and our objective is to maintain a stable rating structure. Consistent quality is very important and something that consumers can miss when they buy solely on price.

We have seen some brokers' travel accounts grow significantly in the last few years. These brokers have recognised the opportunity in this market and are actively and successfully looking to increase their share. We believe that, by increasing customer awareness, intermediaries can still continue to grow their travel insurance market share.

So how does the broker market ensure it keeps a significant share of this market with so much choice for the customer?

To the customer policies can seem over-complicated and premiums expensive. The insurance intermediary still has the advantage of offering added peace of mind by using specialist knowledge to select the right policy for customers and by describing the policy and its benefits in the clearest possible terms.

The broker who wants to gain a share of this market needs to raise customer awareness. Posters demonstrating the advantages, direct mail letters or leaflets with motor or household renewals, an extra comment during a conversation, are all easy ways to raise awareness. Knowing the key issues and understanding the travel insurance market will help you to target your campaign.

So what are the important points? Fortis Insurance has provided travel insurance for over 50 million people in the past 35 years, giving them considerable experience in the market. We think there are a number of key areas to consider in travel insurance:

Service: Customers need reassurance that the policy they buy will provide high standards of service. They are trusting the broker to give good advice, and the insurer to be there if they need to make a claim.

Clear policy and cover levels: For example we aim to provide customers with clear policy benefits. Written in plain English, the policy lays out both the cover and conditions clearly, including a list of sports covered and a very clear medical declaration so that the policyholder knows exactly when to declare a condition that may impact on the policy cover,

Medical assistance: One of the most important elements of any travel insurance policy is a speedy, caring, professional medical emergency service. When you're stuck halfway across the world with a medical crisis, the last thing you want is to be isolated without help. We have chosen to go the route of having our own in-house medical emergency service, Assistance International, who can be contacted 24 hours a day from anywhere in the world.

Cover for sporting activities: Getting the right cover for the sporting activities to be undertaken is extremely important. Get it wrong and cover could be denied. Many insurers offer a standard travel insurance policy. Some may provide cover or activity sports, such as motorised water sports, white-water rafting or scuba diving all within the standard policy, whilst others will ask for an additional charge to cover these activities. It is important that the level of cover for activities is made clear and that the policyholder understands this. Annual policies have proved to be another opportunity for brokers over the last few years. Multi-trip policies are becoming the alternative to individual trip insurance. They offer many families and frequent travellers the peace of mind that they are covered and often provide huge financial savings to the traveller.

Despite the growing popularity of the annual multi-trip insurance policy, nearly four out of five policies are still purchased on a one-off basis for a particular trip. The Mintel research indicates that the annual insurance policy is generally purchased by the 35-64 age group, whilst those under 35 and over 65 tend to purchase on an individual adhoc basis.

So is there scope for further growth in the annual policy sector? Of those asked in the Mintel report, over 70% of respondents taking two or more trips a year still buy one-off single trip cover rather than invest in an annual policy, which would invariably save them money. However, in comparison more respondents taking four or more trips have invested in an annual policy.

There is plenty of scope for growing annual travel insurance business. Intermediaries can recommend it as a potential cost saving, when customers request travel insurance; this will also increase the customer's satisfaction with the overall service. It can also be offered at the renewal of other policies. You can follow up the renewal of annual travel insurance year after year.

With 15% of travellers uninsured, increasing recognition of over priced travel agents' insurance and all the advantages of annual multi-trip travel, there's no reason why intermediaries can't increase their sales with a proactive marketing campaign.