With hurricanes, terrorist events, airport delays and other disruptions becoming regular occurrences over the last two years, offering travel insurance has become more common for travel agents as they improve their ability to explain its value, and more customers realize its benefits.
But sustaining growth and reaching long-term holdouts may still take some work on the part of agents, who are seeing travel insurance sales rates growing more slowly.
According to a recently released study from Berkshire Hathaway Travel Protection (BHTP), agents expect their 2017 sales to be up at least 5 percent, down from the forecast for about 11 percent in 2016.
Eight out of ten travel agents are always offering travel insurance to their customers, but only about one in four consumers say they purchase it with every trip they take, according to BHTP’s State of Travel Insurance study.
BHTP could not say what percentage of those who always purchase insurance use travel agents, but still, BHTP believes that “the travel agent community is doing a good job of educating their clients about coverage and keeping the momentum going,” said Kit Kiefer, BHTP's communications manager.
What's driving increased sales
The study showed that 61 percent of travel agents said increased knowledge about what travel insurance does leads to more sales, while 59 percent said they sold travel insurance due to concerns about family health.
The large difference between agents offering insurance and consumers purchasing it has a lot to do with consumer travel patterns, Kiefer said, explaining that “what you are seeing is that there is a large group of travelers who are booking travel outside of the traditional purchase path, finding a bargain fare, and jumping on plane, and not thinking to purchase insurance."
Some 44 percent of travelers said family health concerns were the key driver for their decision to purchase insurance, while 32 percent said increased knowledge contributed to their decision.
“Every year, more and more people understand the need for travel insurance,” said Carol Mueller, BHTP's vice president of marketing and communications.
Millennials are a growing market
BHTP believes the slowdown in travel insurance sales by agents is the result of a few trends, including older travelers staying closer to home more, which makes them less concerned with having coverage. Additionally, BHTP said, there is a lower purchase rate by the fastest-growing traveler demographic, Millennials.
But that issue will diminish as Millennials age, BHTP said, because the ever-growing Millennial demographic is starting to realize the benefits of travel insurance. “Younger travelers are definitely starting to get it,” Kiefer said.
As they mature and start families, they start acting more like older travel insurance clients, BHTP finds through its research. “When Millennials move up the age bracket, the men do the same stuff, but we see women taking cruises, they’re more concerned about terrorism. Our 35- to 44-year-old female clients purchase insurance more like their older peer group,” Kiefer said.
Marketing through travel agents
BHTP has begun working with Travelex Insurance Services to market through travel agents, but said it still will be incorporating travel agent insights into its product development. “What agents have to say is incredibly valuable because of the milieu they work in every day,” said Kiefer.
“We’re looking at the shift to younger travelers buying more, and what products should be developed for this segment,” Mueller said. “Everyone is offering the traditional bundled insurance product, trip delay, baggage, medical. Now we’re going through the process to see ‘What do we need to develop for this segment.’”
In other findings, the survey showed that agents specialize in cruises, tours and international travel, with Europe and the Caribbean as the top destinations. Also, cruises (river and ocean) and international travel are the key drivers among business types. Additionally, canceled flights are the biggest travel inconvenience, by a large margin; and trip cancellation is by far the most desired travel insurance coverage.
The BHTP State of Travel Insurance study included responses from 1,788 travelers and 265 travel agents, gathered from Aug. 22-Sept. 11, 2017, overlapping slightly with Hurricane Harvey and Hurricane Irma. BHTP said that they were mostly veteran travel agents and consortium members from small agencies.