What if buying travel insurance was as simple as ordering an Uber? It must be to keep up with the digital transformation taking place in the global travel industry.
Insurance is an essential but often overlooked part of travel. It can also be a high-margin utility for travel suppliers, but only when simple, highly convenient and flexible products are seamlessly integrated into the booking flow or part of subscription memberships and credit card benefits.
Just as technology changed the way we book and pay for travel, digital transformation is set to remove payment frictions and change the entire insurance process, improving the customer experience from buying a policy to processing claims, issuing payments and reimbursement.
Insurance also plays an integral but underappreciated role in the convergence of travel and fintech. This trend accelerated rapidly after the pandemic, in the race to master the traveler journey by building an all-in-one travel, payment and technology platform.
The travel and financial industries are coming together 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 seeking the elusive opportunity to own the entire traveler’s journey, from making and paying for a reservation to paying for tickets, tours, lounges, meals, upgrades and ancillary services, including insurance.
Once a business has the technical infrastructure to not only market these accessories, but also facilitate the transaction, it will begin to occupy a larger part of the overall travel ecosystem. Then comes the potential to significantly simplify and standardize the experience of paying for travel services such as insurance.
Insurtech is based on fintech innovation
According to the Amadeus Travel Fintech Investment Trends 2022 Research Report, the majority of travel businesses see fintech and payments as a high priority, with 80% planning to match or invest more than in 2019.
“Expect travel and fintech to become more deeply intertwined as travel companies begin to offer regulated financial products that play on the loyalty advantage that travel brands have built over many years,” the report said.
For example, Citi launched Citi Travel powered by Booking.com, and Capital One built the 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 buying luxury and corporate travel agency Frosch, and US Bancorp bought TravelBank for $200 million.
Meanwhile, Booking Holdings created a fintech unit in 2021 to simplify the industry’s most significant financial hurdles, Amadeus built a separate payments business, Outpayce, and Hopper, the latter of which raised $730 million in funding as of November 2022, continues build its financing technology. complete product.
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 long-standing pain points in the purchasing process – including the ability to sell all kinds of modular protections for flights, hotels, rental cars and even alternative accommodations. They create new revenue streams, improve the customer experience, increase traveler loyalty and trust, strengthen brand affinity, and introduce ancillary services and payment options that would not 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 degrees of success.
While this may be the right answer, it is not sustainable. With no oversight and minimal capital requirements, a major event could leave a fintech unable to pay off its obligations.
Insurance industry safeguards and regulations cannot be circumvented or ignored.
To create the right travel insurance products, suppliers benefit from partnering with an experienced, licensed, regulated and rated insurance company to provide the insurance benefits they promote. This ensures that the process puts personalization and customers at the forefront.
Insurance as the next frontier in fintech and travel
Of all the potential products aimed at increasing link and conversion rates, insurance is one of the hardest to hit.
Travel insurance is an antiquated sector that endlessly frustrates customers with policies and processes designed for the masses decades ago, without any real adaptation for the modern digital age. It can sometimes take months for insurance carriers to process claims, simply because of the lack of technology and software options that can automate the entire experience.
Most businesses across travel and banking have traditionally partnered with a single legacy insurance company that perpetuated all of this criticism. A poor customer experience after the policy is purchased often tarnishes the customer’s core brand.
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Today’s insurance technology companies bring innovation to an otherwise legacy industry with flexible policies that educate customers about the benefits before they buy. At the same time, AI-enabled claim processing reduces friction and increases customer satisfaction, all while increasing customer loyalty for travel and banking companies.
Here’s what to look for when introducing modern, all-in-one, technology-driven insurtech:
The right benefits at the right time: Prioritize insurance products that are more relevant to your customers than the single 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 relevant to pet travel into its sales funnel and quickly saw conversion rates increase by 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 an increase in revenue,” says Jason Haliburton, COO at BringFido. “But in addition to the financial benefit, we feel good about offering pet owners the peace of mind and personalization missing from many digital transactions in travel.”
Fast and easy integration: Own the customer and become the data merchant. Insurance can be an integrated part of the e-commerce sales process, with suppliers positioning the sales opportunity as part of the all-in-one brand experience.
With new platform-as-a-service offerings from insurtech companies, brands can integrate flexible, white-label insurance products into the brand’s digital customer journey. They can skip months spent waiting for expensive implementation and build on an existing API in hours.
Post-sale interaction can now also happen on your platform, without the need for customers to create separate user accounts, go to a third-party website or download another application.
Instant processing of payments and claims: Consumers are willing to pay for convenience, but integrating insurtech into a brand website means that good and bad experiences will reflect directly on the heroic brand. A lengthy and confusing claims process will damage reputation and brand loyalty, which is why partnering with an insurance provider that prioritizes speed and convenience is paramount.
The Insurtech-as-a-Service platform empowers brands to sell and receive payments quickly and settle in real time. No more waiting for the old school small claims process or directing customers to a third party website. Travelers can even receive instant payments based on meeting certain criteria, tracked by the software, similar to how air passenger rights company AirHelp automatically pays flyers who stay on the runway for a certain amount of time.
Frictionless customer experience: Customers expect a seamless experience that complements where they are on any device. While one-click shopping and chat support are great, the human touch is sometimes necessary to calm fears and get the help you need. Partner with an insurance provider that optimizes for fast digital support and offers experienced agents available on the phone when something goes wrong on the road, 24/7.
Upsells and Ancillary Income: Benefit from additional revenue by integrating insurance services directly into sales cycles and increasing traveler sales.
Travel and finance are undergoing a once-in-a-generation digital transformation that has completely revolutionized the way customers shop and interact with suppliers. However, insurance remains a laggard that hinders the brands’ customer experience and loyalty. The foundation has been laid for the transformation of the entire insurance process, which is integral to the optimization and strengthening of the platform of any travel company or financial institution.
Many credit cards offer a built-in travel insurance policy that provides only basic coverage, with no adjustments for customers’ unique travel patterns. Increasing modular insurance benefits based on purchases is a feature that is easily implemented between a bank and an insurtech. This provides additional and relevant protection for the consumer, and ancillary revenue for 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.
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