Sunday, April 24, 2016
How To Make Travel Insurance Better
Over the years, I've received both praise for, and complaints about, the travel insurance industry: trips rescued and finances saved along with claims denied for various reasons. Travel is like any insurance. It's great when it comes through, but there are loopholes and exclusions, and the contracts are so dense with parties of the first part (some run over 7,000-words long) that they're indecipherable. So I asked Stan Sandberg, co-founder of TravelInsurance.com, a travel insurance shopping comparison website, what steps he would take to improve the industry. My questions and his answers follow.
Q. What are the most important steps you would suggest to make travel insurance better?
A. Make policies easy to understand. Simplifying the basics would be a great start. Throw out the “legal jargon.” The travel insurance providers should write their plans’ detailed terms and conditions, usually referred to as the Description of Coverage, in “plain English” to make them easy to understand.
Next, highlight the common scenarios that are not covered in addition to highlighting what a plan does cover. This will help frustration when a customer thinks they have coverage when in fact they don’t. Then, create more transparent pricing. Most policies, and in particular those with trip cancellation, are largely based on the age of the traveler and the total trip cost. The industry can do a better job of explaining why a policy costs what it does.
Finally, take out the friction in making a claim. Some companies are using social media (Twitter, text messaging) to allow customers to initiate and make claims. This is a great trend. We are encouraging our partners to move in this direction. Insurance companies will always require the necessary documentation and will be on the lookout for fraud, but improvements in submitting claims digitally and minimizing the paperwork, can improve and speed up the process for customers.
Q. What can the travel insurance industry learn from other consumer-facing industries?
A. The most important lesson for this industry to learn is to put the customer above all else. Other insurance categories have figured out how to relate to the customer: think Geico and Progressive. The travel insurance industry needs to do the same. The industry could also benefit by taking a page out of the Zappos’ playbook—prioritizing the customer at every part of the process.
Q. If you could design the ideal travel insurance product, what would it look like?
I’d like to see more travel insurance products designed, tailored to and marketed for specific types of travel. For example, a plan designed specifically for skiers, or a plan designed for river cruising or plans for Safaris. For each type of trip, I’d offer the optimal benefits and coverages. For example, if you're taking a river cruise and the water is too high or low so it can't operate, can you get all your money back or only a part of it if the operator substitutes an "equivalent" trip? Each type of trip has its own hazards and challenges.
Q. Should consumers buy travel insurance from a third party or directly from an airline, cruise company or tour operator?
A. With an airline or other travel supplier, you’ll only get options from one travel insurance provider. Yes, you might get to choose between a basic or premium plan, but for the most part, you’re only going to be given a single “one-size-fits-all” option. By going to a third party travel insurance comparison site you can quickly choose from among all available options and buy the right plan at the right price for that trip.
Q. Although "cancel for any reason" travel insurance policies exist, does one insurer provide a better product than others?
A. Most travel insurance providers offer Cancel for Any Reason as an optional upgrade to their premium plans. Travel Insured International introduced a plan last year called Worldwide Trip Protector Plus, which includes Cancel for Any Reason (CFAR) in the plan. This plan is a great option for a traveler who wants flexibility. But in order to qualify for the CFAR benefit, there are certain conditions the traveler has to meet, so it’s important to check with the travel insurance issuer if you’re eligible.