What if buying travel insurance was as simple as ordering an Uber? It needs to be to keep up with the digital transformation happening across the global travel industry.
Insurance is an essential but often overlooked part of travel. It can also be a high-margin ancillary for travel suppliers, but only when simple, highly relevant and flexible products are seamlessly integrated into the booking flow or part of subscription memberships and credit card perks.
Just as technology changed how we book and pay for travel, digital transformation is set to remove payment friction and alter the entire insurance process, improving the customer experience all the way from purchasing a policy through to processing claims, issuing payouts and making reimbursement.
Insurance also plays an integral but underappreciated role in the merging of travel and fintech. This trend rapidly accelerated post pandemic, in the race to own the traveler’s journey by building an all-in-one travel, payment and tech platform.
The travel and financial industries are merging from both directions: Banking giants and fintech providers are entering the travel space while travel providers are building or integrating fintech products. These companies are going after the elusive opportunity to own the traveler’s entire journey, from making and paying for a booking to paying for tickets, tours, lounges, meals, upgrades and ancillary services, including insurance.
Once a business has the technical infrastructure to not only merchandize these ancillaries, but also facilitate the transaction, it will start to occupy a larger portion of the overall travel ecosystem. Then enters the potential to significantly simplify and standardize the experience of paying for travel services, such as insurance.
According to the Amadeus Travel Fintech Investment Trends Research Report 2022, most travel businesses see the area of fintech and payments as a high priority, with 80% planning to match or invest more than they did in 2019.
“Expect travel and fintech to become more deeply intertwined as travel companies begin to offer regulated financial products that play to the loyalty advantage travel brands have established over many years,” states the report.
For example, Citi launched Citi Travel powered by Booking.com, and Capital One built travel platform Capital One Travel powered by Hopper, where the bank is a major investor. JP Morgan is building a full-service travel business, Chasetravel.com, after acquiring luxury and corporate travel agency Frosch, and U.S. Bancorp acquired TravelBank for $200 million.
Meanwhile, Booking Holdings created a fintech unit in 2021 to simplify the industry’s most significant financial hurdles, Amadeus built out a separate payments business, Outpayce and Hopper, the latter which raised $730 million in funding as of November 2022, continues to build out its fintech product suite.
Online travel agencies like CheapOAir and Agoda are partnering with financial institutions like Affirm to offer Buy Now, Pay Later (BNPL) solutions.
These fintech innovations are hitting on long-standing pain points in the purchase process — including the ability to sell all kinds of modular protections for flights, hotels, car rentals and even alternative accommodations. They create new revenue streams, improve the customer experience, increase traveler loyalty and confidence, strengthen brand affinity, and introduce ancillary services and payment options that wouldn’t otherwise be possible.
Because traditional insurance products lagged behind this evolution, some companies took advantage of the gap in the market by rebranding traditional insurance products as “fintech products,” with varying rates of success.
While this might be the right response, it isn’t sustainable. Without oversight and minimum capital requirements, one major event could leave a fintech unable to settle its obligations.
The safeguards and regulations of the insurance industry cannot be bypassed or ignored.
To craft the right travel insurance products, suppliers benefit from partnering with an experienced, licensed, regulated and rated insurance carrier to underwrite the insurance benefits they promote. This ensures the process puts personalization and customers at the forefront.
Of all the potential products aimed at increasing attachment and conversion rates, insurance is one of the hardest to crack.
Travel insurance is an antiquated sector that endlessly frustrates customers with policies and processes designed for the masses decades ago, without any real customization for the modern digital age. At times it could take months for insurance carriers to process claims, simply due to lack of tech and software options that could automate the entire experience.
Most businesses across travel and banking traditionally partnered with a single legacy insurance company that perpetuated all this criticism. Poor customer experience after the policy is purchased often tarnishes the primary customer-facing brand.
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Today’s insurtech companies bring innovation to an otherwise legacy industry with flexible policies that educate customers on benefits before they buy. At the same time, AI-enabled claims processing reduces friction and increases customer satisfaction, all while boosting customer loyalty for travel and banking companies.
Here’s what to look for when embedding modern, all-in-one, tech-driven insurtech:
Precise benefits at the right time: Prioritize insurance products that are more relevant to your customers than the one-size-fits-all insurance policies of the past. Customers today can tailor their insurance and premium costs based on their exact needs, destination and other specific use cases.
For example, leading pet travel OTA BringFido integrated travel insurance products that are relevant for pet travel into its sales path and quickly saw conversion rates shoot up to 15% at checkout, with a clear path for adding additional products and services that would continue to increase conversion rates.
“Offering tailored insurance to our community of pet owners has definitely provided a revenue lift,” says Jason Haliburton, COO at BringFido. “But aside from financial gain, we feel great about providing pet owners with the peace of mind and personalization that is missing from many digital transactions in travel.”
Quick and easy integration: Own the customer and be the merchant of record. Insurance can be an integrated part of the e-commerce sales process, with suppliers positioning the upsell opportunity as part of the all-in-one brand experience.
With new platform-as-a-service offerings from insurtech companies, brands can embed flexible, white-labeled insurance products into the branded digital customer journey. They can skip the months spent waiting for expensive implementation and build onto an existing API in a matter of hours.
Post sale interaction now can also happen on your platform, without the need for customers to create separate user accounts, go to a third-party website, or download yet another app.
Instant payout and claims processing: Customers are willing to pay for ease, but integrating insurtech into a branded website means that good and bad experiences will reflect directly on the hero brand. A lengthy, confusing claims process will hurt the brand’s reputation and loyalty, which is why partnering with an insurance provider that prioritizes speed and ease is paramount.
Insurtech platform-as-a-service empowers brands to sell and take payment quickly and settle in real time. No more waiting for the old-school process for claims of small amounts or directing customers to a third-party website. Travelers can even receive instant payments based on meeting certain criteria, tracked by software, similar to how air passenger rights company AirHelp automatically pays out flyers who sit on the tarmac for a certain amount of time.
Frictionless experience for customers: Customers expect a seamless experience that meets them where they are on any device. While one-click purchases and chat support are great, the human touch is sometimes necessary to assuage fears and get the help one needs. Partner with an insurance provider that optimizes for quick, digital support and offers experienced agents available on call when something goes wrong on the road, 24/7.
Upsells and ancillary revenue: Reap the rewards in extra revenue by integrating insurance services directly into the sales cycles and upselling travelers.
Travel and finance are undergoing once-in-a-generation digital transformation that has completely revolutionized how customers buy and interact with suppliers. Yet insurance has remained a laggard that hinders brands’ customer experience and loyalty. The foundation is set for transforming the entire insurance process, which is integral to optimizing and strengthening the platform of any travel company or financial institution.
Many credit cards offer an embedded travel insurance policy that only provides the very basic cover, without any customization to customers’ unique travel patterns. Upselling modular insurance benefits based on purchases is a feature that’s easily implemented between the bank and an insurtech. This provides additional and relevant protection to the customer, and ancillary revenue to the supplier.
Selling travelers the right flexible policy to meet their individual needs — and making that purchase, claims and assistance experience as easy as ordering an Uber — is an important component of the overall digital transformation for any organization.