Travel restrictions remain volatile due to the spread of coronavirus. Insurers that are taking on greater levels of risk by providing a range of flexible, cancellation, and medical cover aimed at COVID-19 could see an increase in loyal and returning customers.
GlobalData’s 2019 UK Insurance Consumer Survey found that price comparison websites are the leading distribution channel for travel insurance, with 45.5%.
of respondents stating they bought their policy through this channel. The survey also found that consumers were far more likely to buy single-trip polices than an annual policy. This highlights that many consumers were price-oriented when it came to purchasing travel insurance, seeing it as a one-off purchase for their immediate travel needs.
However, COVID-19 is changing the way consumers view travel insurance. The Financial Ombudsman Service reports that during the initial stage of the pandemic (April to June 2020) there was a 157% increase in complaints against insurers, 23% of which were related to travel insurance. Travel insurance complaints increased by 32% over this same period. This was driven by a lack of consumer understanding about what they were covered for when booking a trip or traveling abroad, given the exclusions applied by insurers.
As travel restrictions continue to change, consumer attitudes towards travel insurance are shifting. Customers are increasingly becoming cover-oriented rather than price-driven. Travel insurance comparison site Squaremouth reports that 70% of its travel insurance sales since COVID-19 was declared a pandemic in March have gone to Seven Corners, Trawick International, Tin Leg, Berkshire Hathaway Travel Protection, and Travelex Insurance Services. These companies offer the most protection for COVID-related claims, such as cancelling a trip last minute.
As consumers become more cover-oriented when seeking travel insurance policies in light of COVID-19, the share of policies sold through the direct channel could rise. This is because customers may increasingly feel the need to check the terms and conditions of their cover directly with their insurer.
Consumers will undoubtedly feel a sense of loyalty towards travel insurers that were able to provide the cover they needed to travel during the pandemic – especially since a number of travel insurers temporarily ceased selling travel insurance immediately after the virus was declared a pandemic. This left an insurance gap in the market when customers arguably needed cover the most.