The ICT Industry Has the Potential to Give the Global Travel Insurance Market a New Lease of Life
Travel Insurance has been fraught with the perils of being complicated which have been acknowledged as inconvenient by abroad set of consumers. To this end, technologies have been at the forefront in the effort of simplifying the processes of travel insurance. The technologies which encompass artificial intelligence (AI), blockchain, and machine learning, have been known to guide the global travel insurance market into the present times. The adoption of these technological developments has the potential to further market modernization, process expedition, customer service improvement that aids in customer retention and giving a new lease of life into the age-old procedures with concrete favorable outcomes for both insurers and policyholders.
After all, humans are undoubtedly the proverbial creatures of convenience and for such creatures, the ability to make a claim or buy ravel insurance via an app with a simple press of a button, assisted by the support available during every stage of the process from well informed and friendly chatbot, certainly has the potential to simplify the erstwhile complicated processes as it is the case with rideshare apps. Such a convenience aided by technological advances has rendered the global travel insurance market increasingly attractive. For instance, Shift Technology is of the opinion that AI has the capability to unlock the insurance of tomorrow. The company endeavors to bring about AI-native solutions that have the potential to empower insurers to deliver unparalleled consumer experiences. They are capitalizing on the trend that has been set about by the on-demand economy as exemplified by eCommerce, food delivery, and ride-sharing. More the simplified the entire policy lifecycle is the better is the rate of adoption by travelers who would consider travel insurance as simply an addition to their plans. Another challenge is customer loyalty. Prior to the COVID 19, when travel insurance was not a legal obligation by most of the countries in the world, unlike the subscription-based automobile and home insurance, travel insurance was faced with the issue of providing a simple user experience.
Again, the integration of technology has emerged as the manna from heaven for the travel insurers as far as customer loyalty is concerned. Besides convenience, bespoke solutions are also something that the consumers are eagerly inclined to avail. Machine learning technologies that capitalize on customer data enables the adequate design and development of parametric insurance products that are perfectly tailored to various individual needs. Thus, the integration of such technologies marks a shift away from the standard one-size-fits-all products to those variants which are known to insure against risks associated with a particular set of activities that one undertakes irrespective of the prevailing environmental conditions. Therefore, tourism products could be made more attractive by travel providers with the integration of such technologies making their product relevant and ultimately ensure repeat business. Conversely from the perspective of process simplification via technology is something attractive for the designers and developers but the result of the technology is the aspect that woos in consumers because they are looking for chatbots but speedier support, also they are not interested whether the product is AI-enabled they are keener on swifter claims.
Additionally, machine learning is capable of being employed in the monitoring of data sources which falls outside the purview of the service provider. These sources include weather websites, for instance, which would enable the technology to automatically provide compensation to consumers based on the prevailing weather forecasts. For example, in case a traveler is presented with an option to cancel an overnight trip in response to natural calamities and receives a refund automatically without the need for claims, it would have a much better impact on the consumer experience-wise as opposed to the experience of manual claims. Besides digital transition that has the potential to transform the global travel insurance market into a user-friendly experience. And as the foundation for an effective foundation for such transformation effective implantation of efficacious fraud detection and mitigation strategies is the strategic move for the travel insurers as well as the implementation of technology as a tool to balance the dissemination of necessary information and recommendation of favorable policy options. The latter is particularly important because travel insurance comprises too many moving parts which would result in unfavorable results for both the company and insures if any one aspect is simplified too much.
While the capability of the ICT industry to transform and potentially reshape the global travel insurance market has been depicted above, it also useful to gain a regional perspective. According to the US Travel Insurance Association (UStiA) the travels originating from the USA have demonstrated a higher proclivity to ensure their investments in travel are properly safeguarded with an efficient travel insurance product. As per UStiA, approx. $3.8 billion was spent by Americans on various kinds of travel insurance products. This is an increase of 40.9% from that registered during 2016. The protection and coverage constituted annual products and per-trip travel protection, with benefits that ranged from emergency medical, lost luggage, medical evacuation, trip cancellation, and interruption, along with a variety of other benefits and programs made commercially available by the member companies of UStiA. Moreover, as per UStiA the travel insurance market has been continuously subjected to constant evolution to cater to the demands of a variety of consumers. Products that offer coverage over investments, lives, and valuables have been made available as a response to increased mobility.
2018 marked the coverage of approx. 65.8 million people, and by over 46.3 million plans approx. 65.8 million people were protected. These plans were bought by the consumers via a variety of distribution channels Viz. insurance producers, internet aggregators, travel agents, travel insurance providers, and travel suppliers. From 2016 the travel insurance market experienced an increase in the number of people covered which was in the order of 49.1%. Whereas the market witnessed a significant increment in the number of plans which is in the order of 36.5%. During the publication of this update, the most popular choice of products comprised cancellation/interruption which constituted benefits pertaining to trip cancellation and interruptions that represented almost 90% of the travel insurance products that were purchased during that period. On the other hand, plans which fell under the purview of benefits related to medical and medical evacuation represented only 90% of the travel protection products purchased. Trip cancellation/interruption remains the most popular choice Programs that include trip cancellation/interruption benefits accounted for almost 6.3% of the travel protection products purchased.
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