With a one way Trans-Tasman bubble already in place, the travel industry across Australia and New Zealand is waiting anxiously for business to pick up – and, according to travel insurers, the availability of cover will play a critical role in giving customers the confidence to start packing their suitcases.
Although travel insurers issued advisories earlier in the year once COVID-19 was declared a pandemic, policies offering some form of COVID cover have been steadily entering the market over the past several months. Although a complete form of cover encompassing closed borders and changes in restrictions may not be possible, insurers have been determined to cover as much as they can, and give travellers confidence that they won’t be taking on every risk themselves.
Cover More general manager, sales and distribution New Zealand, Will Ashcroft believes that travel insurance is going to be a critical purchase for all travellers going forward, and he expects that availability of cover will be a vital deciding point for many customers considering international travel.
“We’ve sat down and spoken with a lot of our travel partners, and we know that travel insurance plays a really critical role within that industry in terms of giving confidence to travellers,” Ashcroft told Insurance Business.
“That will help get the whole industry moving again, so we tried to really bring out the key points in terms of what is going to get people travelling again, and allow them to feel comfortable jumping on a plane overseas and domestically.”
“The domestic travel numbers in New Zealand have been very strong since the second lockdown, and I think that will continue,” he explained.
“The Trans-Tasman bubble is only half a bubble at the moment, but some customers are still going overseas to Australia – especially now that there is cover. But as soon as that bubble is reciprocated, I think the travel numbers will be really strong.”
Ashcroft said that although many customers will be looking at closed borders as a risk, the travel sector has already acknowledged that insurers can’t take the full scope of that risk on themselves. He said many of those in the travel industry have collaborated when it comes to offering flexibility, and that between insurers, airlines and other operators, the risks can be reduced enough to allow customers to travel confidently.
“Cover for border closure would of course be a key benefit, but our travel partners understood that that risk was very, very significant,” Ashcroft said.
“When they talk to their travel providers, whether that’s a hotel, airline or tour company, they’re all coming to the party as well in terms of providing flexibility, refunds or credit. Everybody is really trying to do their part in trying to get the travel space moving again, and we’re certainly doing our bit to ensure that customers are covered in the event that they get sick with COVID-19 overseas, or in the event that they have cancellations if they get sick and can’t do activities.”
“If someone comes into contact with a sick person, those quarantine costs can be quite expensive too,” he added.
“So at Cover More, we made sure that we covered all of that. We went live recently with travel cover for Australia, and we’re hearing anecdotally that customers are now planning their trips there because they feel comfortable knowing they have cover, and they wouldn’t have travelled without it.”
Cover More general manager, underwriting and product, Eftim Stojanov said the company is looking to drive trends in the travel sector, and expects insurance to be a crucial part of every customer’s travel plans going forward. He stated that conversion rates for travel insurance have already increased, and that trend is likely to continue as more international markets start to open.
“I think the conversion rates for travel insurance will definitely increase, purely based on awareness,” Stojanov said.
“People want to travel to Australia to see family that they perhaps haven’t seen for many months, and they wouldn’t do it without cover. On the domestic side, we’ve definitely seen an upswing in the number of policies that have been taken out – and once international markets open, people will look for travel insurance and COVID cover more than ever before. Travel insurance will be an absolutely critical part of their purchase for their overseas travel.”
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“If you’re providing proper products which are fit for purpose and include some level of COVID cover, then that’ll really help the travel industry as a whole,” he said.
“We’re also working on an international cover that goes beyond Australia, and we’re hoping to release that shortly.”
When it comes to business and revenue, Will Ashcroft believes 2020 has been one of the most challenging periods in the history of most travel insurers. However, he said businesses are starting to see sparks of optimism with areas of the world lifting restrictions, and a potential vaccine coming into play.
“All of our business units around the world have really struggled, and sadly, we’ve had to adjust our size in correlation with that,” Ashcroft said.
“Travel companies around the world are really struggling, but we feel we’re seeing some light at the end of the tunnel at last.”
“Naturally, 2021 won’t be like last year,” he concluded.
“But it’s all new now, and we have to think of the new existence rather than compare against previous years.
“One thing we’ve learned is that we just have to be flexible, we have to adapt and look at new ways of doing things. This has given us the opportunity to almost start with a blank slate, and think about how we can do things even better.”
