European Travel Insurance Conference
Our Managing Director, Kate Huet, was keynote speaker at the European Travel Insurance Conference held in Vienna on 4-5 September. She shared her insights from this gathering of key industry players:
With attendees from all over Europe, spanning from the UK all the way over to Russia, it was fascinating to once again hear how other countries “do it”
By do it, I specifically mean; how they distribute travel insurance and what risks their travel insurance covers and also how they service the cover they sell.
Europe is still very different to the UK from a travel insurance perspective. It is rather like where the UK was in the early 1970’s in the days before packaged holidays took off.
Top Up Innovation
My attendance at the conference was to speak about Safe Journey – our travel insurance top up scheme that covers terrorism and as a result of terrorism, a consumer’s disinclination to travel – a travel insurance exclusion in most of the world.
The Europeans are fascinated by this, as terrorism is a problem to them too and for their clients. Our cover for disinclination to travel some might think was removed when the Package Travel Directive 2015 came into effect on July 1st 2018 - I beg to differ. We will first have to see if the European courts determine if article 12 of the directive is going to be upheld – because no government will take the diplomatic step of suggesting travel to a country or area is unsafe, if it will result in significant losses to their country financially, economically or reputationally – just because a few tourists got killed. That’s a hard fact to swallow, but at no time has travel to Paris been put on the do not travel list by the UK Foreign and Commonwealth Office (FCO). Point made.
Be Prepared, Not Scared
Counter terrorism is busy in the UK, with over 600 cases live at any one time, ISIS fighters returning from Syria and home-grown ISIS/ISIL inspired terrorists in our midst who are unknown, have no previous convictions, and are off the counter terrorism radar. Terrorism might have seemed quieter of late compared to the ghastly atrocities of 2016 and 2017, but every month plots are discovered and thwarted, and the sad thing is we only have to miss one to have a disaster on our hands.
The humble castor bean yields the toxin Ricin and huge quantities are turning up in Europe right now. It’s not terrorism as we recognise it today, but it is likely to be tomorrow. If we don’t get this 100% right, 100% of the time, attacks will happen. This is why travel insurance has to adapt and cater for these changes. Staying in the dark ages of the 1970’s whilst Abba did their thing and we all had fun in the sun simply won’t do the job the industry needs to do, to rise to the challenge of the needs of UK travellers today, tomorrow and into the future.
In creating our new scheme ‘International Travel Insurance’ we boldly went where the market is not – we put the consumer in precise control of what they want, based on what they know they need. Disinclination to travel due to terrorism is in there, and so too is cover for upwards of 2,500 different pre-existing medical conditions – it just depends what they are, where you are going, for how long, and when you are planning on travelling. Take a look – you may think it is a refreshing change to the norm too and better value for money.
In Europe, by contrast, most insurance is provided by Banks and is termed Bancassurance. Travel insurance falls within this, and it also includes Motor, Home and Health Insurance.
Different Travel Styles
Bear in mind that the UK is a small island and Europe is a huge land mass… But many people from Europe who go ‘abroad’ on holiday actually motor to their destination. Some obviously fly, but driving 1,500 miles or more is not unusual.
Another fundamental difference is that a vast proportion of European holiday makers holiday once a year – usually for a month. Think of what Paris is like in August: empty of Parisiennes who are all in the coastal towns and villages, or in Spain or Italy, having driven there. A travel policy for a European will include Motor breakdown cover and cover for the complexities that arise if your car gives up and leaves you stranded.
With no NHS or equivalent in Europe, everyone has to have a private health insurance policy. This drives a major difference in the cover travel insurance in Europe offers. Europeans will extend their health insurance to that of an International policy for the duration of their trip, or if they travel a lot they will have an International Health policy in place already.
Thus, their travel insurance does not need to cover them for pre-existing medical conditions - virtually NO TRAVEL INSURANCE in Europe covers pre-existing medical conditions, unless it is a scheme being distributed by a UK firm – and largely only to Brit expats who are off to the USA or further afield than Europe, who rely on an EHIC for their urgent medical care whilst resident in the EU.
Only the European who has an accident (often motoring) would be claiming on their travel insurance, or the person who gets ill before their trip and can’t travel – thus needs to cancel, or the person who gets ill on their trip and needs medical care whilst on their trip, if it has nothing to do with a pre-existing medical condition.
This cuts down the volume and value of claims hugely for travel insurers. In fact, a travel insurance portfolio in the EU would run at no more than 40% loss ratio, yet here in the UK a scheme that does cover a high degree of pre-existing health conditions may well run at between 80-90%.
This makes travel insurance here in the UK a lot less profitable for insurers. It’s a lot less desirable to tie money up for years (due to solvency laws) with no guarantee of return, and for consumers this makes it more expensive – as the ABI tell us, every day travel claims amount to over £1m.
Structure and Regulation
For as long as there is an NHS we won’t have to buy private health insurance, so travel insurance will have to keep providing the cover for pre-existing medical conditions.
As the global rates of Medicare inflation go up by 10% annually, we don’t see these rises being passed to consumers in the increase of policy premiums – the market is getting squeezed tighter and tighter.
Few insurers want to be part of our market, and that has nothing to do with BREXIT. The level of regulation just increases each year. What happens in one area of the industry e.g. Banking and PPI policy sales, drives change into travel insurance years later – things were not broken, but steps must be taken to fix problems that could possibly occur, due to increased regulation.
Regulation has affected the distribution of travel insurance. It was once the domain of the UK travel agent, sold at point of sale of a holiday – the natural and right point at which insurance is best placed to commence – but it’s now is so unattractive to travel agents who would need to comply with all the financial regulations, that it has opened a channel of distribution called price comparison websites.
These are not all things to all people. Yes, they may be cheap, but the cover they offer is often inferior and may well be full of complicated terms and conditions – anyone with extensive pre-existing medical conditions is highly unlikely to find an adequate solution, so they need a specialist provider and a specialist insurance.
These specialists are the domain of much smaller companies than the friendly meerkat – these smaller providers can’t afford to compete in the online environment where a click through on a relevant keyword costs upwards of £20 per click. As a result they’re overlooked and no-one searches too hard or for too long. They are there though… maybe on the second or third page of your search results!
Today it is all about signposting in the UK travel insurance industry – if you can’t cover someone who has approached you for cover, then you need to recommend a different provider who may be able to. A competitor perhaps. Whilst ITHC/OneStop4 will always signpost, not all providers will do this – maybe because they are unsure who can actually cover a traveller with in excess of 15 different medical conditions, if one is a terminal cancer patient, or had a heart attack a week ago.
Europe does not have these problems, dynamics or points of difference – it’s a flatter and much less dynamic marketplace with insurance products that are all, broadly speaking, very similar.
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