Selling Travel Insurance: A Missed Opportunity for Agents?

Travel insurance has long been on travel agents’ radar but selling it to clients is far from a slam dunk. Clients – and agents themselves – often aren’t entirely convinced of the need for it.

“It can be like trying to convince a 27-year-old that he really needs a health.gov policy,” said Mark Carney, incoming president of the U.S. Travel Insurance Association (UStiA).

Complicating the issue are state regulations that often make the sale of insurance by travel agents a complex, burdensome proposition.

Carney, who is president and CEO of HCC Medical Insurance Services., talked with Travel Market Report about the value of travel insurance, what keeps agents from selling it and clients from buying it and UStiA’s initiatives.

How does the U.S. Travel Insurance Association work with travel agents?
Carney: We’ve been working with ASTA to streamline the selling of travel insurance through the adoption of uniform regulations that would allow agents to offer their clients travel insurance without having a license [to sell insurance].

We’ve been successful in 21 states that have adopted new travel insurance standards [eliminating the need for agents to get an insurance license]. We’re hoping in 2014 to extend this to the whole country. It’s largely a matter of time before it happens.

Are agents selling as much travel insurance as they can?
Carney: Travel agencies and suppliers lead in travel insurance sales. But a lot more could be sold. Look at our experience in the U.S. market compared to the European market, which has a much more mature travel insurance sector. The take-up rate for our policies here compared to Europe is much lower.

In large part the issue is awareness. In Europe, [travel insurance] is ubiquitous. It’s been around longer. There are advertisements for it. You can buy it in kiosks and stores. It’s more understood by the public.

How substantial are the commissions agents can earn selling travel insurance?
Carney: Every company [in UStiA] pays commission but they each have their own way of doing it. We see it [travel insurance] for the agent as another commissionable opportunity for the same customer. The way I’d approach it if I were an agent is that it’s same-store sales.

Can you give us some idea of what it costs to insure a trip?
Carney: A ballpark would be 6% to 9% of the total cost of the trip for a quality plan. A lot of factors influence the cost, including the number of travelers and their ages.

What is the value of travel insurance?
Carney: Every year thousands of people have to cancel or interrupt trips for reasons that would be covered by travel insurance. The issue becomes forfeiting money or not being able to have someone help you through a tough illness on the road.

In all instances, our industry participants provide round-the-clock coverages. We understand it’s a big world and we have to respond to people. The question becomes what do you do if you don’t have that coverage?

If you’re able to take one premium vacation a year, is it worth it to you to have the protection in the event that something happens? Expenses can be mind-numbing. Medical evacuation, for example, can be in the six figures.

Are travelers covered in other ways?
Carney: You think you might be covered through your homeowners policy or your health insurance plan or your credit card, when the reality is that’s typically not the case. Even if you have some coverage, who will tell you where to go and take care of you [in a medical emergency]?

What does travel insurance cover?
Carney: There are two types of claims scenarios we protect against – those prior to a trip and those during a trip. People have significant investments in their vacations; we’re protecting them in case of one of a dozen things that can and do happen.

A typical scenario is you have to cut a trip short because you or a family member has taken sick. It could be a flight is delayed due to bad weather and you need a hotel room, or your luggage has been lost, or you need medical assistance abroad.

Does travel insurance cover trip disruptions due to political unrest?
Carney: Typically there are policies that respond to political unrest provided claims weren’t brought after a travel warning was issued by the state department. You will find [travel insurance] policies across the board that will have some sort of political provisions, although there may be terms and limits. But in general we recognize that as a claim event.

What is your association doing to raise awareness of travel insurance?
Carney: The awareness issue is front and center for us. It’s critical. We publish a study every year with stats on the industry and where it’s going. There’s a consumer version that we publish.

We have an annual conference, which is really a learning opportunity for folks in the industry. We don’t have the broad swath of agents we’d like attending, but we’re looking hard at ASTA to participate.