Guest Post: How do we increase trust in travel insurance in 2024?

Phil Denman, insurance expert and CEO of MGA Capacity Insights, unpacks how to and importantly, why there's a need

A recent survey by ATOL revealed that 56% of UK adults intend to take an overseas holiday in 2024 – with 51% saying they plan on travelling abroad more than once this year.

However, a Forbes Advisor study found that 21% of Brits have never purchased travel cover. This means that around a fifth of UK adults could be travelling abroad this year without any protection against any of the risks associated with international travel.

Why don’t people buy travel insurance?

There are a number of reasons why people might decide to forego travel insurance:

Affordability 

Overseas holidays can cost a lot. Many travellers might not like the idea of paying for insurance on top of all their other travel expenses. 

Of course, travel insurance can be more affordable than many realise. But if cover has a reputation for being expensive, then some may simply choose to go without.

Understanding what’s covered

Many people may not understand the true value of travel insurance and what it covers. Most will grasp that it’s to offer cover for various “worst-case-scenarios.” Some may decide that it’s not worth spending money on something they need “just in case.”

Unfortunately, some may only come to understand the value of travel insurance when it’s too late – when they’re facing a missed connection, lost luggage, or something much worse, with no cover in place.

There may also be some who misunderstand just what sort of events travel insurance can cover. Many may assume that the cover is limited to comparatively rare events, such as accidents, injuries, and overseas hospitalisations. They may not realise that travel insurance can also cover relatively common events, such as cancellations due to severe weather. 

Finally, there will be those who will tell themselves that they don’t need insurance because their current policy – whether it’s health insurance or contents cover – will also cover them abroad. But of course, this isn’t always the case.

Accessibility

People like convenience. Shopping around for travel insurance, comparing prices, cover levels and limits may seem like a chore after a lot of time has already been spent making holiday arrangements. For some, finding the perfect cover for their trip is not a priority. 

Trust

The cumulative impact of all these travel insurance myths – that you don’t need it, that it costs too much, that your current policies will cover you – is that many simply may not trust travel insurers. They don’t trust insurers to deliver value at a fair price.

And if this underinsurance problem is overall an issue with trust, then the question we need to ask ourselves is: How can we increase trust in travel insurance in 2024?

Make travel insurance as easy as possible

There’s an easy way we can take all the friction out of travel insurance, to make the process of getting cover as clear, streamlined and straightforward as possible allowing customers to purchase travel insurance cover as part of a wider transaction.

If customers can buy travel insurance at the same time as they book their plane ticket or their hotel room, then there is no need for them to shop around for their own deal. They do not have to compare prices or assess their own cover needs. As the purchase of cover is tied directly to the purchase of their transport or accommodation, they may feel less like their paying for something just in case they’ll need it.

The answer to this problem is embedded insurance, which has been a hot topic in the insurance industry for some time now. Many have argued that embedded insurance could play a role in closing the insurance gap. And it bears repeating that for the UK travel industry, around a fifth of travellers are heading abroad without any form of cover in place. That is quite the gap.

Building a bespoke, embedded travel insurance programme into a travel company’s product strategy can provide the kind of personalised, simplified protection that customers want. Some of the complexities that have held back the development of connected travel insurance in recent years can be addressed through closer collaboration between distributor and insurance provider – no one size fits all approaches.  

If we want to increase trust in travel insurance, we need to remove all the barriers that travellers currently face when it comes to getting the cover they need. 

Yes, it may help to invest in communicating the benefits of travel insurance so as to ensure that as many people as possible understand its value. But if we want to see real change, we need to work to make travel insurance so affordable and so convenient that travellers treat it as a no-brainer. And offering it at the point of sale seems like the fastest and most effective way to do just that.