Preparing for the global comeback in travel – Air Doctor

Travel insurance has been hit hard by the Covid-19 pandemic. There’s no need for buying a policy when you can’t leave your house, but as the lockdown measures begin to ease, holidays will be top of people’s priorities, giving travel insurance a much needed resurgence. Air Doctor has issued a white paper exploring the opportunity ahead.

Over the past few months, insurance firms have not only had to face a decline in policies but an increase in claims. Firms have had to pay-out millions of dollars in cancelation and disruption claims to their customers.

While things may seem bleak, it will inevitably turn around. Travelling is one of the biggest industries in the world, with masses of people taking a trip abroad each year. In 2018, it was estimated there were 1.4 billion tourist arrivals globally, according to the World Tourism Organisation. According to a travel writer for Forbes James Asquith, similar dents in travel caused by SARS or the Icelandic volcano eruption in 2010, the number of people travelling was quick to rebound.

We are already seeing evidence of this happening. Countries are building lists of quarantine-free destinations, letting their citizens to once again book their holidays. The UK is one of the countries to build a travel list, which highlight nearly 80 countries it deems safe for people to visit at the moment. This is a dynamic list and is changing weekly, but it shows that governments around the world are eager to get travelling back on people’s agendas.

The US has been hit the hardest by the pandemic. The country has struggled to contain infections and is showing no signs of improving. Despite this, people are still eager to travel. A survey from US management consulting firm BCG found that 69% of US consumers couldn’t wait to begin travelling again. Further to that, 36% said they were already planning their summer vacation.

These are positive signs for the travel industry and by extension, the travel insurance space. According to the Global Info Research, travel insurance premium revenue is expected to rebound quickly. By 2022, revenues will exceed those reached in 2019, it said.

Air Doctor believes insurance firms should be using this time productively. Instead of sitting on their hands waiting for things to improve, they should be taking a look at themselves and their operating models to ensure they are prepared for when business is back in mass. When the gates open, business could be flooding in. director of e-commerce Cheryl Golden stated that whenever the world went through a similar seismic incident like the coronavirus, travel insurance has grown in popularity. The Air Doctor’s whitepaper claims that before 9/11, only 7% of US travellers bought travel insurance, but following the attack this figure rose to 15%. The coronavirus could see this increase to 30%.

While business might bloom, it will not be the same. Air Doctor said consumers will likely want their policies to have enhanced flexibility. With the situation changing each day, people will want the ability to get premium coverage and cancel for any reason policies. It states that interviewed ten major insurance firms and found cancel for any reason policies had increased by 680% compared with last year.

People are going to be cautious while they are travelling and are going to be more observant over things they previously wouldn’t have. Air Doctor said this will also result in consumers paying more attention to what their policy covers in terms of medical emergencies.

Air Doctor said, “Insurers must step up and adapt to these changing expectations. In the long run, they will not be able to keep customers satisfied and loyal to their brand if they do not adapt their offerings to improve the level of service delivered to their end users.”

This is not the only thing insurance firms will need to be aware of. Air Doctor said that firms must reassess the basic operating model of the industry in order to improve their loss and combined ratios in the longer term. The InsurTech explained how travel insurance is often cheaper than other types of insurance, with policies for UK consumers averaging at £5, pre-pandemic. Reasons for this could simply be because it’s not mandatory so consumers are put off spending too much.

The market dynamics have been pushing loss ratios upwards long before Covid-19 began. Market Research completed research which showed UK travel insurance gross written premiums shrank by 10.8% in 2018 due to a decrease in polices sold and average premiums, yet claim costs increased by 4.4%. Air Doctor states that another issue for travel insurance is it is bought on a single-trip basis and not annually like most other policies.

Air Doctor said, “Travel insurers must therefore find a way to improve their cost structure while boosting customer satisfaction in a bid to nurture loyalty.” One way to do this is through lower claims costs, which is can achieve by controlling medical costs.

“A good place to start is to try to redirect travellers from inpatient to outpatient settings. “Legacy” travel insurance sees most travellers seeking medical help in hospitals – because they do not know where else to turn when falling sick abroad. However, care provided in ER and other inpatient settings is expensive, on top of often being inefficient (frequently involving long waits and poor treatment).”

Controlling costs of outpatient visits is another way of receding claims costs. A way of doing this is by using a network of local doctors that operate under and agreement with an insurer or third-party, it said.

Insurance firms should not stop at lowering their loss ratio, but should also increase their combined ratio, which is measures incurred losses as well as expenses in relation to the total collected premiums. Ways of doing this include streamlining claims management processes and consequently cutting back office costs.

Travel insurance is a competitive market and differentiating their offerings can help them increase the amount of policies they sell. Improving aspects like engagement and proactiveness towards the customer can help to get a greater share of the millennial market, which are typically less inclined to buying a policy.

Case Study

Air Doctor empowers travellers to find a doctor based on specialty, location, language, and other client reviews, while they are in a different country. Its services are available in 48 countries and are aimed at letting people talk to a doctor that speaks their native tongue. Its network comprises of 10,000 practitioners with expertise in a range of medical fields.

An appointment can be set up for a house call, at the clinic or via telemedicine. The platform aims to help people find a trusted doctor, even when they are in a different country. Once they get their invoice, they simply send it off to their insurer. Air Doctor has raised a total of $10.9m in funding, with it closing its Series A on $7.8m in March 2020.

The Phoenix, which is the second largest insurance firm in Israel, is a client of Air Doctor and monitored the impact of the service between December 2018 to August 2019. As part of the partnership, The Phoenix policyholders could use the doctors network to get outpatient medical care abroad at no cost.

“The primary aim was to reduce reimbursement costs for The Phoenix by preventing expensive and often unnecessary inpatient stays at (emergency) care facilities. The secondary aim was to improve the experience for travellers by enabling them to search for doctors by proximity, medical specialism, and languages spoken, among other factors, in order to directly reach the most appropriate care.”

Air Doctor was able to redirect 15% of inpatient hospital visits to outpatient appointments. Furthermore, The Phoenix estimated that 5% of claims would have required hospitalisation without Air Doctor and would have had an average cost of $2,660.

The InsurTech was helped to centralise invoicing and automate their processing, as well as streamline payments for The Phoenix, reducing the time spent on administrative tasks. Finally, the InsurTech helped to achieve a 14% reduction in outpatient to outpatient costs, saving over $1 million for The Phoenix and a 30% year-on-year policies increase.

The sample size for this investigation was one million policies.

To view the full white paper and case study, click here.

Copyright © 2020 FinTech Global

Enjoying the stories?

Subscribe to our weekly InsurTech newsletter and get the latest industry news & research


The following investor(s) were tagged in this article.