It’s one of the most difficult areas of selling for a travel advisor: Offering travel insurance to their clients.
While the majority of U.S. states are reforming their travel insurance regulations so that travel advisors do not need to become licensed to “sell” travel insurance, there are still states with rules and regulations that make agents cautious about diving too deep into the travel protection marketplace.
These states typically offer little guidance on how advisors can become licensed and retain their license (like tests or continuing education requirements). Some vaguely reference the ability for travel agents to explain travel insurance features and benefits to their clients as described in sales materials and website content provided by their suppliers.
In some states, like New York, anyone who is not a licensed insurance broker is limited to activities often ambiguously referred to as "offering and disseminating" policies offered by a travel insurance supplier.
“It’s definitely an area of ambiguity,” said Paul Ruden, a retired attorney and now an industry consultant who has worked with travel advisors and the industry for several decades. “While more states are adopting the Travel Insurance Model Act, adopted by the National Association of Insurance Commissioners with the support of ASTA and the U.S. Travel Insurance Association, bringing some consistency to the industry, some states still have their own rules and regulations.” A list of the states that have adopted the model are listed here: https://www.naic.org/store/free/MDL-632.pdf
This has resulted in widespread confusion among travel advisors. In fact, on a recent travel agent Facebook group thread, advisors responded to a question about selling travel insurance with wildly different perspectives. Some said they stay away from selling it completely. Others said they forward protection plans they feel are best suited for a client’s specific travel itinerary.
Others expressed their concern for being sued if they directed a client towards purchasing a travel insurance policy that eventually didn’t cover a situation, and the customer was injured in some manner. “There are lots of stories about travel agents being sued by angry customers,” one advisor told Travel Market Report.
This trepidation is a shame, Ruden said, because in general, “it’s highly desirable for travel advisors to offer travel insurance to their clients every time, and connect them either with a brochure, a website link, or transfer them on a call to a supplier expert where they can purchase the insurance,” he said.
“You don’t want a client coming back to you after the fact saying, ‘Nobody told me I could get coverage for my trip. It’s going to cost me thousands, and you are going to pay it.’ I wouldn’t take that risk as a travel advisor.”
Still other advisors on the Facebook thread said they help clients talk through potential risks and point their clients towards different supplier plans they feel are best suited for that risk. “I would consider it irresponsible for me not to if I saw a plan that I know could protect them,” one agent said.
Listen for client risks
During the sales qualification stage, Ruden noted, travel advisors should be learning about situations that could impact a client’s trip, and leave the customer vulnerable without insurance.
“Having an ill family member for whom you might have to cancel your trip to care for, booking tight flight schedules that could cause you to miss your cruise port departure, or a pre-existing condition that could worsen during a trip, are all reasons why a good advisor should tell a client, ‘Hey, I think you might want to purchase travel insurance to protect yourself,’” he said.
“It’s safe for advisors to say to their clients, ‘You should understand there is an element of risk you’re taking because of your situation. Where you come out on that risk is a matter of how much money you want to spend to protect your vacation,’” Ruden said.
Agents can recommend, for example, that Cancel for Any Reason (CFAR) protection is a stronger option than basic, cheaper plans, but they should inform the customer that even CFAR comes with some limitations. “I don’t see that as stepping over any lines,” said Ruden.
Inform, but be careful
Unfortunately, Ruden said, too many travel insurance conversations are more difficult. “The client says, ‘Thank you, travel advisor, for suggesting travel insurance, but this is very complicated and I’ll just pass.’”
This is often due in part because of the wide variety of things that could happen on a contemporary leisure travel trip. The specific answers to those situations are typically found in the small font, terms and conditions pages of a travel policy, said Ruden.
“Terms and conditions aren’t written to make it clear what is covered and what isn’t. Their main interest is making sure that they define for the travel insurance provider what risks are covered and aren’t, to protect them and comply with their rules and regulations,” Ruden said.
This is where travel advisors “have to be very careful” responding to the client when the client says, “I don’t understand which policy is best,” Ruden said. “From a regulatory point of view, the more you interpret an insurance policy’s terms and conditions, the more you are acting like an insurance agent.” That’s the time to hand a client off to the supplier’s customer service teams, he said.
Steer away from being definitive, Ruden said. If an advisor specifically says to a client during the insurance sales purchase process, “I think the event you described is covered, and then that event materializes, and the insurance company says, ‘No, you were wrong,’ now you have a legal problem,” Ruden said.
Despite these complexities, Ruden still advises agents to always offer travel insurance to their clients. “It takes a lot of skill to talk to a client about insurance,” he said. “But it’s worth it.”