Sanjay Datta, Chief — Underwriting, Reinsurance and Claims — ICICI Lombard General Insurance speaks about the trends and the future of travel insurance segment.
How would you explain the emerging trends in travel insurance sector in India?
The emerging trends in the travel insurance sector are mirroring with the mood of travellers in the COVID era. Customers are looking at local road-based travel, thus domestic travel insurance has picked up. Since most of the countries have not opened borders for international travel, that market is still slow. Travel insurance has been made mandatory by some countries and many other countries might be following suit.
What is the current market size of Indian travel insurance sector and where do you see this sector in the next 2-3 years?
As on FY ’2020, the travel insurance market constituted approx. 814 Cr and a growth of one per cent was seen in the overall market sector.
Given the current scenario, the travel industry has seen a steep decline in past few months. Travel is slowly picking up with the commencement of domestic flights. The number of international travelers are still low and there are only over 20 countries in the air bubble agreement with us at the moment. The numbers will be limited due to the safety concern for some time.
However, with countries implying mandatory travel insurance for overseas travel and the increased awareness of the need of travel insurance, we are hopeful of treading on a path to recovery in the coming year.
The COVID outbreak has brought the world to a standstill. What does this mean for the insurance sector and your company?
The COVID outburst has impacted the travel industry immensely because of the travel restrictions applied by the countries such as closed borders, lockdown etc. Gradually the airlines have started in the domestic sector and also internationally with countries negotiating air travel bubble/ travel corridors with other countries. As a precautionary measure, people will be limiting travel and the travel will be restricted to business or student travel.
In future, more relaxation in the overseas travel is anticipated taking all safety guidelines into consideration. The domestic sector is likely to see a surge as many tourist destinations are luring customer with discounts and maintaining safety & hygiene.
As a result, the travel insurance is gradually picking up specifically in the domestic sector.
It is a good time for insurers to emphasize on the need for travel insurance. The insurance companies will have to keep giving added assurance to their customers that they can safeguard all the risks associated with the changed travel landscape in the pandemic situation. They need to keep evolving their offering. We are working on strengthening both our domestic as well as overseas offerings to give all confidence to customers that they are safe while travelling.
What impact the crisis will have on the travel insurance sector? What has been your response to the crisis?
With the COVID-19 outbreak, the travel industry has come to a standstill and has had a drastic impact on the travel insurance industry in the past few months.
Post the outbreak of COVID-19, the countries closed borders, the travel came to a halt across globe. With the number of cases in India reaching 90000 daily, a panic situation spread among the population confining people to their houses.
Now as the flights have resumed in the domestic sector and air bubble arrangement across nations, the industry is witnessing a slow recovery gradually. Slight surge can be seen in the domestic travel insurance as compared to the overseas.
This crisis had restricted all travel across nations resulting in a number of Indian nationals being stranded in different parts of the world. We extended our travel insurance including Covid-19 coverage for such individuals to safeguard their stay in the foreign land. While other insurers put a stop to issuance of policies when COVID was on peak overseas, we continued offering travel insurance. As an insurer we are constantly working to better our domestic as well as overseas offering in order to keep up with the changing times.
The COVID -19 has brought insurance sector in focus. What is your take on the opportunities and the risks that can arise for insurance business? Do you see the premiums going up as the number of claims may increase?
The COVID-19 has surely brought the focus on Insurance industry and at the same time has highlighted the need of insurance among the population. The current times have changed people’s perspective about insurance. Thus travel insurance penetration is expected to increase considerably in future.
The pandemic situation has certainly added to the increase in the number of claims but as an insurer, our focus would be to ensure the best coverage suited to the current scenario but also keeping in mind that it doesn’t leave a hole in the pocket of the customer.
Majority of the insurance was purchased by outbound travelers, now with the future of outbound looking bleak in the short-midterm, do you see an opportunity to tap the domestic travel segment aggressively? Are you planning to partner with any Airline or OTA?
Post pandemic, in terms of overseas travel leisure and tourism travel is bound to see a more dampened growth than business, student and other essential travel as travel resumes. The domestic travel is expected to surge in the near future. With airlines/ hotels luring customers with lucrative deals, people would be looking forward to taking vacations. The demand for travel insurance to cover against the unforeseen travel contingencies will increase creating wide range of opportunities to engage with the airlines and OTA. We already partner with some OTAs. We will certainly look at designing programs with other OTAs and airlines.
What is the impact on your long-term development strategy due to COVID-19? How are you tweaking your strategy to cater to travellers?
The global pandemic has been an unforeseen event that no one anticipated or was prepared for. Travel being one of the most affected sector, has led to change in short as well as long term goals specially designed around the current situation by the all industries. The strategies revolve around adjusting to the current needs. We are focusing on providing the best possible insurance solution to the customer given the COVID situation to assure them of protection at all times by designing covers and VAS services.
What sort of technological innovations/changes you have adopted in your services such as touchless services, minimum contacts etc -- keeping COVID 19 in mind?
ILGIC has always maintained an easy approach towards the policy issuance process with minimum contact. The customers can purchase policy on the website in one go. A 24 hour helpline number can be used for all travel assistance and claims. Many a claims can be settled on documents sent on email without need of any physical dispatch. We are working on proactive intimation of certain claims, where customer need not even approach us for claim settlement.
VAS services like doctor on call, road side assistance in self-drive travel etc. have been offered to give the customers a confidence that we are there with them at all times.
The insurance companies will have to keep updating the current offering in order to safeguard all the risks associated with travel in this pandemic situation.