Travel insurance is big business. As a matter of fact travelers will spend a whopping $2.2 billion on insurance this year– an increase of 5% over last year.
Part of the reason for that increase is worry about trips thwarted by terrorism, illness, weird weather and the Zika virus. But another big reason travel insurance sales are strong is that the travel industry itself is very strong, and getting stronger. Americans are traveling more, spending more, and hoping to protect those trips by buying insurance. With positive trends like that, it’s no surprise that the wise Warren Buffett has made a big investment in travel insurance with Berkshire Hathaway Travel Protection (BHTP).
Over the last two years, BHTP has produced “The State of Travel Insurance” report that tracks and monitors travel trends– and how those trends could impact insurance sales. As part of a recent project TravelSkills has with BHTP, I took a read through the exhaustive report, and found the following trends worth noting:
Overseas travel is up. Way up. A lot more people are planning international trips in 2017– this is due to the strong economy, the strength of the U.S. dollar and the steady stream of transoceanic airfare deals. At TravelSkills, we’ve reported on many of these transatlantic and transpacific deals which have dropped to unprecedented lows in recent months (around $400-$500 roundtrip from east and west coast). Right now, it appears that good deals should keep coming due to increasing competition and low fuel prices. In addition to cheap flights, Americans are jumping on board European river cruises in record numbers. All this is good news for BHTP because international trips are much more likely to be insured than domestic ones.
Prices up slightly. Travel prices should increase an average of about 4% this year. Nobody likes higher prices, but a 4% increase is not enough to keep Americans from venturing forth. Again, this is good news for travel insurers because higher trip costs = higher travel insurance premiums. Speaking of prices, the BHTP report shows more consumers shopping for insurance using helpful aggregators such as InsureMyTrip.com or Squaremouth.com.
Airline reliability issues. Increased attention to airline issues such as flight cancellations, delays and lost luggage are leading more fliers to buy travel insurance to protect them. Recently BHTP devised a unique way to protect passengers from airline operational issues by offering them direct cash payments. For example, a traveler with BHTP’s AirCare protection would get $1,000 deposited directly into his or her bank account during a tarmac delay of two or more hours. Flight canceled? BHTP pays $150 on the spot. Missed connection? You get $100 plus assistance getting on the next flight. Delayed or lost luggage pays $500. Coverage starts at $34 per flight. More details here.
Travel agents, who seemed to be going the way of the dodo bird in recent years, are making a comeback. Why? Due to the mind-boggling amount of travel information now found online, travelers are simply overwhelmed. Frequent travelers don’t have time to sort through all the options. Infrequent travelers don’t know where to start, or whom to trust. That’s where a good, experienced and knowledgeable travel agent comes in handy– he or she can cut through the clutter and find just what you need. This trend is also positive for travel insurance because agents usually suggest travel insurance as part of any big purchase. Looking for a great travel agent? Then check out my colleague Wendy Perrin’s WOW list— a group of experienced travel agents that she personally vets and categorizes based on their destination knowledge.
Bucket lists! I’m not sure if this trend popped up because of The Bucket List movie (2007) or not, but travelers are planning more adventure trips this year. Why? Well, for the adventure of course, but BHTP says that they are also doing it to “cross something off their bucket lists.” I have to admit I frequently gaze at the map covered with dots on my office wall and dream about where I want to go next (see above). Destinations on the top of my list include: Vietnam, Machu Picchu, Arkansas (my only missing state), the high deserts of Bolivia, nearly all of Africa, and (most embarrassingly for this world traveler) Venice, Italy! Bucket list travel is also good for BHTP because those trips tend to be more expensive and riskier that others, so are more likely to be insured.
The Caribbean and Central America are hot, and it’s not just because of all the photos and videos of our ex-president taking a well-deserved vacation in the Virgin Islands. One key reason for the uptick in interest in the region is because the World Health Organization has declared that the Zika virus is no longer a global health emergency. In addition, there’s pent up demand and an abundance of cheap new flights from the US to Cuba, and plenty of new low-fare flights and cruises to other islands. BHTP research shows a 12% increase in propensity for Caribbean travel in 2017.
Want more? BHTP’s 2017 State of Travel Insurance Report is available for download at http://go.bhtp.com/SOTI2017
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