Multi-Trip Travel Insurance Could Cost Less, But Has Low Awareness

With more travelers taking multiple vacations each year, travel insurance costs can frequently add up if a policy is purchased per trip.

But what most travelers are likely unaware of is that many travel insurance companies offer an annual, less expensive, multi-trip option, said Jason Schreier, CEO of APRIL-USA, a travel insurance company that provides multi-trip insurance.

These types of policies offer a somewhat stripped-down version of traditional single-trip policies. For example, they typically will reimburse a traveler for unexpected lodging, meals, and transportation costs if travel is delayed a certain number of hours (usually 6 to 12). They will cover emergency medical and dental care, including hospital visits, surgery, prescription drugs, doctor and dentist office visits and emergency medical transportation.

But travelers are restricted to trips of no more than 90 consecutive days; policies do not offer trip cancellation coverage; and reimbursement for things like trip interruption, medical evacuation and baggage and personal effects replacement might be capped at lower levels unless a consumer purchases an upgrade.

“For frequent travelers who aren't concerned about canceling, or who have refundable travel arrangements, they are an efficient and cost-effective way to get one year of medical coverage for multiple trips,” said Steven Benna, marketing specialist at Squaremouth, a website that offers travel insurance from multiple companies.

Still, lost, stolen, or destroyed baggage and personal effects (up to the policy limit) likely would be covered by an annual policy, as would reimbursement for the purchase of travel essentials if a bag is delayed 12-24 hours. Travel assistance services for help with medical emergencies and travel emergencies also are offered.

Provider describes core target markets
APRIL-USA’s Schreier believes a core target market for travel agents would include busy, frequent travelers, like business owners who may not want to research and consider the varied insurance options for each trip.

According to MMGY in its 2017 Portrait of the American Traveler survey, the average American household took 3.3 vacations in the previous year. Another target market is active and healthy, baby boomers or retirees who travel frequently, but want the added assurance that in the event of an accident abroad, they are insured.

Finally, travelers who frequently find themselves booking a last-minute trip may not have the time to consider travel insurance and also might find an annual policy convenient, Schreier said.

Travel industry sales strategies dampen multi-trip insurance sales
For decades, suppliers and travel agents have been inclined to focus on selling per trip insurance policies, dampening the consumer’s exposure to and demand for annual policies, even if those policies would save them money, Schreier said.

This is in part due to distributors and insurers earning more revenue on per trip coverage, Schreier said. Annual plans with basic coverage at APRIL–USA start at around $150-200 a year.  However, that might only include up to $1,000 in cancellation coverage. If a traveler wants $5,000 in per trip cancellation coverage, premiums could go up to $450-600 per year.

“If someone travels three times a year, and purchases a comprehensive policy each time through an agent, the agent could earn more commission selling per trip insurance,” Schreier said.

That might be changing now as a confluence of forces are educating consumers better, and providing for greater flexibility and income from these plans.

Multi-trip policy purchases are on the rise
“The industry has taught consumers to purchase insurance in conjunction with a specific trip, but we’re starting to see a bit of a shift,” Schreier said. Aggregator sites like InsureMyTrip and Squaremouth, he said, are making other options more readily apparent, exposing consumers to a broader range of coverage.

Indeed, Squaremouth said that the number of annual multi-trip policies purchased in 2017 was up 31 percent over 2016, Benna said.

Additionally, technology is allowing insurers like APRIL-USA to both enhance travel agent commissions for policy holders coming through the agent channel, and allows for travelers to upgrade their annual coverage if a specific trip requires additional insurance.

“This way, if your travel pattern changes from the norm, you can add on something you need only for that trip,” he said.

Schreier believes that as more travel agents and consumers are educated about multi-trip insurance, providers will enhance their product offerings and underwriting skills, and introduce more policies customized for the market.