Travel Insurance Set for Greater Customization and Flexibility

The travel insurance industry is experiencing a resurgence of competitive, customized offerings, as it shakes off the ambiguity resulting from years-long negotiations with state regulators, industry executives and observers said.

A few weeks ago, Berkshire Hathaway Travel Protection (BHTP) launched WaveCare, a travel insurance product specifically designed for cruisers, including higher medical and evacuation coverage limits.

Meanwhile, APRIL Travel Protection just launched an innovative annual plan, offering trip cancellation coverage available in increments of $1,000, up to $5,000, along with all of the other traditional comprehensive insurance offerings. Every time an insured makes a claim, that amount is deducted from the total coverage they purchased for the year. Policies start at around $50 for $1,000 in trip cancellation coverage.

As Travel Market Report reported last year, travel insurers recently negotiated a series of Regulatory Settlement Agreements (RSAs) with a group of states who are a part of the National Association of Insurance Commissioners (NAIC).

As a result, insurers and underwriters have greater clarity and alignment with state commissioners about the types of products and services that can be offered to consumers.

Additionally, a group of smaller underwriters have gone out of business as a result of their agreements, leaving the remaining competitors with a better assessment of risk tolerance for new policies and strategies, said Jason Schreier, CEO of APRIL Travel Protection.

“We’re definitely seeing more competition and innovation on the product development side,” said Stan Sandberg, co-founder of TravelInsurance.com, “and also in the way people are looking at distribution.”

“I have tried for years to get an underwriter to find a way to offer cancellation insurance on an annual basis,” said Schreier about the new annual APRIL Insurance plan.

“Most have taken three steps back every time I mentioned it,” he said. “They thought we were just asking for an unlimited number of complaints. But we finally found an underwriter willing to test this thing out, and see what kind of data we get back on it.”

“Ultimately, this is good for the industry,” said Schreier. “It suggests that if state licensing becomes more simplified, that will allow for more innovation by insurers and underwriters. It’s no surprise you are seeing new products like cruise-specific packages. I think we will see more of that.”

“While we felt that our business practices already met the spirit of the agreement signed with the lead states of the NAIC’s working group on travel insurance,” said Daniel Durazo, director of communications and marketing at Allianz Global Assistance USA, “we feel now that the agreement brings clarity to issues which had previously led to confusion and uncertainty in our industry.”

Travel insurance companies are still required to file their products for approval in 51 jurisdictions (50 states and the District of Columbia), a time- and labor-consuming practice, often taking a year or more from the time a product is designed until it is ready for consumer purchase.

Industry executives are hopeful that that will grow easier over the next few years, because on Dec. 19, 2018, NAIC voted to adopt a Travel Insurance Model Law that could establish greater standardization and consistency across the industry and the country.

The Model Law would provide “additional clarity,” Durazo said. The new law still needs to be adopted in each state, and Durazo encouraged travel agents to learn more about the law and their state’s legislative process to have their voice heard. 

“Shortly after the agreement was completed, we rolled out new, proactive travel insurance benefits which makes travel insurance even more useful to consumers and to our travel agent partners. While these innovations were already in the works, the completion of the agreement has allowed us to focus more resources on developing new products and services and making our claims process simpler and faster, for the benefit of all travelers,” Durazo said.

Ultimately, Sandberg believes that more innovation, as well as enhanced transparency in terms and conditions, could help increase insurance penetration with travelers younger than the average (45-year-olds).

Finally, Sandberg believes that all indications are green for travel in 2019. The stock market gyrations in December don’t seem to have dampened enthusiasm for traveling, he said, given current travel insurance purchase trends for trips scheduled in the coming year.

“Outside of the 24-hour news cycle, we see a number of factors contributing to a solid year, including positive consumer confidence and spending. In the travel industry, I think we have more reason to be optimistic.”