After a half-year standstill, the travel and tourism industry has once again started taking baby steps towards normalcy. Globally, tourism and its allied industries have been bantered due to the pandemic. Although post resumption, leisure segment is picking up, segments like corporate and business travel are expected to take much longer time to recover. Outbound travel has restarted in a staggered manner within countries having air-bubble agreements. Destinations are now majorly banking upon the domestic tourism to revive the industry.
Despite the early green shoots in the tourism industry, still there is a major fear psychosis and fear amongst travellers to take a vacation. All hotels, destinations, airlines, cruise liners, car rentals, etc across the globe are following stringent SOPs and protocols implemented by their respective government’s and their brands. Despite all these measures, is your travel safe and secure as earlier?
This factor has made the travel insurance segment all the more important. Earlier, the travel insurance business usually witnessed outbound travellers purchasing it as an add-on or as a visa requirement. But, in the post-COVID19 era, every traveler will look at travel insurance as an utmost priority.
Speaking about the market size, as per a latest report on Travel Insurance Market published by Valuates Reports, the global travel insurance market size was valued at US$ 19.2 Billion in 2019 and is projected to reach US$ 39.3 Billion by 2027, growing at a CAGR of 17.4 per cent from 2020 to 2027.
Earlier, increase in many incidents, such as cancellations of flights, loss of baggage & essential documents, and medical emergencies were the major issues driving the travel insurance market size. This topped up with COVID-19 challenges, will boost the market size.
Asia-pacific Travel Insurance Market size is estimated to reach US$ 9,875 Million by 2022, growing at a CAGR of 10.1 per cent from 2016 to 2022. During the forecast period, insurance aggregators are expected to grow at a CAGR of 14.4 per cent. The Asia-Pacific travel insurance market is dominated by insurance intermediaries, as they are one of the most conventional and trusted distribution networks.
In India, the travel insurance market was valued at over US$ 80 million in 2018, exhibiting a CAGR of close to 12 per cent. Travel insurance market in India accounts for less than one per cent of the total travel insurance industry worldwide.
Sharing specific analysis on India market, the report further states that India possesses high market potential, but the travel insurance market is still in its nascent stage. Growing awareness of the significant benefit of travel insurance among the Indian population provides India with a significant opportunity to become one of the world's main travel insurance markets. The number of domestic travelers across India, in addition to foreign travelers, have also increased. It has been noted that each year 30 million Indians are subject to outbound travel, thus creating a significant opportunity for expansion.
Travel insurance has now become far more advanced, with the support of technologies such as geo-location, application program interface (API), artificial intelligence (AI), data analytics, and global positioning system (GPS), among others. Dev Karvat, Founder, CEO – India & Emerging Markets, TrawellTag Cover-More, says, “Our travel protection products are already available for purchase through a dedicated web portal for our clients, which has seen higher traffic in these times. Travellers can avail 24/7 telephonic assistance, for any emergencies. We have also activated WhatsApp based communication with clients and end customers to ensure seamless communication. Our Impulse platform is integrated with the portals & systems of our ecommerce and airline partners to offer optimal travel protection solutions. We continue to evaluate and invest further in digital interventions to improve customer experience and minimize physical contact with our clients and customers.”
Travel and tourism coming to halt has also deterred the growth of travel insurance companies. But, despite this degrowth, insurance companies have been successful in increasing awareness about the benefits.
Speaking about the impact of covid-19, Karvat, stated, “With current travel restrictions by most of the countries, the travel insurance market is as affected as any other segment in the travel industry. However, the awareness about travel protection has increased manifolds and we anticipate that more travellers will now opt for it while planning their trips. Tour operators and travel aggregators will now vouch for comprehensive travel protection products, as it would help the traveller to not only recuperate from financial losses, but also support them with assistance services during unforeseen events.”
Despite tourism regaining momentum, players across the industry is aggressively looking to instill confidence amongst travellers. In a bid to attract customers, Sterling Holiday Resorts has introduced ‘Holiday Insurance’.
Sharing his views on the current status, Vikram Lalvani – Chief of Revenue Management, Sales and Destinations, Sterling Holiday Resorts, says, “The last few months have been challenging for the hospitality sector, it crippled the confidence in travellers across the globe. At Sterling Holiday Resorts, safety & comfort of our guests, and sustaining their trust in the brand has always been our priority. Therefore, we had a major inclusion in our strategy to introduce a complimentary ‘Holiday Insurance’ benefit, with the option to opt-in at the time of booking/reservations. The insurance is provided by Digit Insurance and is a unique offering that takes care of trip cancellations, accidents, lost or delayed baggage, delayed or cancelled flight, missed connections, emergency accidental treatment and evacuation and even personal liability and bail bond.”
Over the last couple of years, India has outpaced major markets to be one of the fastest growing outbound destination. With disposable income and majority millennial population, India is still estimated to be one of the top outbound source markets. With increasing awareness, travel insurance is now becoming a mainstream rather than an optional service.
Karvat said, “The travel insurance landscape is seeing a positive change as customers who would purchase travel insurance purely as an optional service are now opting for it as an essential requirement, as they recognise the risks of travel and the benefits of being covered. However, a comprehensive travel protection product to provide real time information about emerging situations across the world, medical evacuation, local hospitalisation support coupled with relevant travel insurance benefits is the need of the hour. We are witnessing a greater demand for such holistic products.”
Sterling Holiday Resorts have already witnessed a spike in travellers opting for the insurance. The group has also extended the insurance for groups and MICE travellers.
Lalvani added, “Sterling is the first in the segment and by the same virtue the largest resort brand in India to offer Holiday Insurance to its guests as an opt-in option as part of their booking. With an insured value of up to Rs. 3 lakhs per person, the insurance covers the guest from home-to-resort-to-home. Since the reopening of resorts, we witnessed that 60 per cent of guests who made reservations with us until the next year, have chosen to include ‘Holiday Insurance’ as a part of their bookings. Another major benefit of the Sterling Holiday insurance is that it is applicable for group booking including Corporate meets, Conferences and Weddings.”
Also, post covid pandemic, more destinations will make travel insurance mandatory for visa application which will be a major boost for the insurance players.
“The Indian travel insurance is slated to witness substantial growth in the next 2-3 years. An increasing number of countries are making travel insurance mandatory due to the current crisis and domestic travel will witness a boost with the government easing travel restrictions. As safety is a concern for everyone, travellers will be more aware of the risks and will opt for travel insurance. Travel assistance such as evacuation facilities, emergency medical assistance and real time information about emerging situations across the world will create a positive difference for the industry,” Karvat added.
Airlines & hotels as a catalyst
One of the most interesting moves in the industry is now major airlines are offering complementary insurance to encourage patrons to restart travel without fear.
Etihad Airways has partnered with AXA to introducing COVID-19 global wellness insurance cover as part of Etihad Wellness, the airlines new health and hygiene programme. Guests who are diagnosed with COVID-19 during their trip won’t have to worry about medical expenses or quarantine costs.
Adelane Mecellem, Chief Executive Officer Asia, Middle-East, Turkey and Africa, AXA Partners, said, “At AXA, we are focused on improving the customer experience and wellness of individuals during these times. As such, we are proud to partner with one of the world’s leading airlines, Etihad Airways, and provide their extensive loyal travellers with new protection solutions when needed most.”
Also, Virgin Atlantic has introduced free COVID-19 insurance cover on all new and existing bookings. The policy is designed to complement existing travel insurance and provide additional peace of mind for upcoming trips.
Juha Jarvinen, Chief Commercial Officer at Virgin Atlantic, said, “Our priority is always the health and safety of our people and customers and this industry-leading Virgin Atlantic COVID-19 Cover ensures customers can continue to fly safe and fly well with us. We believe this complimentary cover will provide some added reassurance for our customers as they start to plan trips further afield. It applies in parallel to existing travel insurance policies which may now exclude COVID-19, and provides comprehensive cover for coronavirus, recognising the needs of our customers as we restart services.”
In another instance, Accor has also partnered with AXA to provide medical support to guests across the 5,000 Accor hotels worldwide as part of its ALLSAFE campaign.
“Welcoming, safeguarding and taking care of others is at the very heart of what we do and who we are as hoteliers. This distinctive partnership with AXA which we have been working on for several months makes even more sense in today’s context. In an increasingly complex environment, our 300.000 team members on the ground will be able to assist our guests and ensure their safety during their stays, turning our hotels into shelters. This initiative combined with our ALLSAFE enhanced hygiene protocols, will be key to rediscover the Love of Travel in the 5000 Accor properties around the world,” added Sébastien Bazin, Chairman and CEO of Accor.
Globally, tourism boards and destination are restarting inbound in a phased and a restricted manner. The recovery rate of the inbound tourism is expected to grow at a snail’s pace. Domestic tourism is now seen as the formula for reviving tourism. Over the years, insurance players have been promoting domestic travel insurance which is still at a nascent stage.
Speaking about the domestic products and the way forward, Karvat said, “A number of domestic travel restrictions have been rolled back and several states have begun to allow inter-state travel. These changes have provided a significant boost to domestic tourism. We have developed benefits for new age travel trends such as staycations, domestic business trips and domestic cruise trips covering cancellations and delays. We are already offering our assistance services through our existing partners including retails travel agents as well as leading airlines and OTAs. Our long-term strategy of providing tailored solutions for our clients has not shifted. However, we have tweaked our short-term actions to focus more on travel assistance services for travellers during such distressful situations. We continue to work alongside our underwriter partners to explore the possibilities of designing products that will be relevant in a COVID world.”
Also, in terms of homegrown brands, Oyo earlier this year joined hands with ACKO General Insurance to provide complementary insurance package offers.
In a statement, Gaurav Ajmera, COO, India and South Asia, OYO, said, “The unique feature which has never been offered before in the Indian hospitality industry, designed in partnership with ACKO, aims to cater to the unexpected, unplanned and isolated situations, that our guests across 300+ cities in the country, that choose OYO as their preferred accommodation option, could face.”