Easy travel insurance highlights the importance of brokers

Published: March 25, 2019

Updated: April 1, 2019

Author: Luke Jones

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It has never been easier for customers to buy insurance as the industry increasingly moves online and becomes automated. However, the evidence from one insurance line that has already moved online suggests brokers will remain an important part of the industry.

Nel Mooy, head of travel for AXA, says the current situation in the travel insurance industry highlights how pivotal brokers still are.

“For so long now, people said brokers are going to go,” Mooy said. “Brokers are enterprisers, and brokers ultimately are the ones who are the best at understanding what the customers need.

“They are the ultimate customer influencer, the ultimate customer business, they reinvent themselves to make sure they stay relevant.”

Travel insurance has made more of a digital migration than other lines. Customers can now purchase travel coverage simply online with a few clicks or touches. Whether this is when buying a flight or through an offer from another service, like a bank.

Despite the automation of the purchase process, consumers are not receiving adequate protection. A knowledge gap exists where customers simply don’t know what product they are buying. This is where the role of the broker remains as vital as ever.

“Travel insurance is a super complex product and it covers so many things – so it is liability, it is medical, it is cancellation, it is interruption, it is all types of things,” Mooy said.

This complexity does not coincide with a simpler purchase process, which is why horror stories regarding inadequate travel cover are frequent. Customers getting caught in a foreign country facing massive medical bills is something that happens more than it needs to.

“It’s a relatively cheap insurance, and in relation to the potential loss that you could have, especially on medical, that’s quite big,” she explained.

“I would say overall that it’s a challenge to have customers engage with the policy wording and with the quality of policy because the prices are not that high. If you buy paracetamol, you don’t spend as much time as if you buy some nice Dior perfume. But the price of travel insurance doesn’t reflect the value it actually could give you.”

Because it is inexpensive, travel insurance is not usually sold through a broker. Customers often confuse the low cost as a sign the insurance must be easy to understand, but that’s not true.

“Because the policies are relatively cheap, there has, for a long time, been the heritage of selling travel insurance through brands that already have distribution,” she explained.