Doris Hoffmann has her sights set on a river cruise in 2023. And like so many travelers, she plans to pack a reliable travel insurance policy.
But which one?
On a $3,000 cruise, policies will cost her between $200 and $250, which she considers reasonable. She limited the choices to policies from Allianz and Trawick.
“I was hoping to get some information about the companies and their claim payment history before making a decision,” said Hoffmann, a nurse from Winter Springs, Fla.
Fortunately for Hoffmann, both companies have excellent customer reviews and pay their claims promptly.
In many ways, Hoffmann is a typical travel insurance customer. She is aware of the potential dangers, but is also careful in choosing a travel insurance company for her purchase. And there is the added uncertainty for 2023, as a possible recession, more geopolitical problems and the continuation of the pandemic add to travelers’ worries.
“Consumers have a greater awareness and understanding of travel insurance as a result of the pandemic,” said Beth Godlin, president of Aon Affinity Travel Practice. “And in addition, there is a greater focus on protecting their financial investment in travel as well as their health, safety and security.”
What’s different from 2023 for travel insurance?
In part one of this series, I asked if you need insurance next year (short answer: You probably do). But what are some of the trends shaping travel insurance in 2023? What are some of the things prospective travel insurance customers need to know? I asked the experts.
“Travel is changing,” says Christina Tunnah, general manager of marketing and brands at World Nomads. “Prices are rising, reflecting both increased demand coupled with supply constraints, and inflationary pressures in the economy in general. And that means travelers need to ensure they have the right level of cover before they leave home.”
A recent survey of US travelers showed that travel intention is increasing over the next 12 months. Last June, 67% of travelers said they were ready to travel. But by September it had risen to 74%.
“Moving into 2023, the travel industry continues to recover,” said Megan Prescott, a product manager at AXA Partners US. “There is no doubt that the travel landscape has shifted, including a greater interest from travelers in protecting their travel investments. Travel delay benefits are becoming more sought after as travelers experience a higher frequency of flight cancellations and delays. This trend is likely to continue until the airline industry fully recovered, which could be as late as 2024.”
So what does this mean for travel insurance in 2023? Here’s what experts said:
More people will need travel insurance
“Travel is becoming more and more expensive,” says Laura Heidt, the insurance desk manager at Brownell Travel. “So the investment is higher, and they are interested in protecting their investment.” It’s gotten to where insurance is a must-have for trips costing more than $3,000. The average price of a domestic round-trip airline ticket reached $397 in the latest available quarter, the highest level in eight years.
Because of the higher prices and the added uncertainty, more people are buying travel insurance. According to Joe Cronin, president of International Citizens Insurance, only about 35% of U.S. travelers purchased pre-COVID travel insurance, and then only for major trips. “Now about 80% of Americans protect their travel and their health with travel insurance.”
Melissa Downham, a luxury travel consultant and founder of Roaming Travel Co., says travel insurance used to be an afterthought. Now it’s one of the first things she discusses with her clients.
“Since 2020, my inquiries about travel insurance have gone from about 10% of customers to probably 90% of customers,” she says.
It will be easier to understand your travel insurance policy in 2023
One promising development this year: It’s become easier to know what’s in your travel insurance policy. This is the assessment of John Rose, Chief Risk and Security Officer at ALTOUR. “The top insurance providers like AIG and Chubb have done a fantastic job of explaining coverage,” he says. “Travel advisors and customers understand the policy wording more effectively.”
So if you’re buying travel insurance in 2023, expect to be a little less confused by the policy. But it will still be a dense read.
Here come the insuretechs – and their parametric benefits
New insuretech companies are also changing the industry. Companies like battleface, which offers more customization options and offers its own 24/7 emergency travel and medical assistance service, are making travel insurance more responsive and user-friendly.
“New insurance companies have hit the scene with faster claims resolution processes,” says Elad Schaffer, CEO of Faye Travel Insurance. The innovations include real-time refunds directly to your phone and a digital wallet that allows you to buy food and other necessities when there is a long flight delay.
These immediate paybacks are called parametric benefits.
Angela Borden, a product strategist at Seven Corners, says these benefits will be huge next year. “For 2023, we expect to see an increase in parametric benefits, which provide a real-time claims solution for travelers by verifying the ignition events as they occur and then paying the stated benefit amount,” she explains.
Travel insurance bundles are “in”
This summer’s unprecedented flight delays have made bundled travel insurance products more popular, according to Berkshire Hathaway Travel Protection (BHTP). This has boosted sales of products such as ExactCare Extra since the start of the summer. “The forecast of continued “flight mares” through 2023 will shed more light on flight discomfort benefits,” says Carol Mueller, BHTP’s vice president.
But she says travelers should take time to review each benefit before buying a bundled insurance product. “Always speak directly to your travel agent or the travel insurance provider about your concerns about covered reasons for cancellation or what is covered when you are on the trip,” she says.
Travel insurance may not be enough in 2023
One of the biggest changes that experts expect is that more travelers will not rely solely on travel insurance.
“We have seen a growing popularity of consumers purchasing travel insurance for the comprehensive benefits in trip cancellation plans and then purchasing a separate emergency medical evacuation membership, which is not considered insurance,” explains Stan Sandberg, the co-founder of travel insurance site. TravelInsurance.com.
Sandberg says travelers also purchase medical evacuation memberships with Medjet Assist or Covac Global, which he says is a cost-effective way to have a special air ambulance service available to transport you back home in the event of hospitalization while traveling. Sandberg is part of the trend. He enrolled his family of four in the MedjetHorizon annual plan, which also offers travel security services and crisis response.
“Traveler preferences have moved travel protection for emergency medical services and evacuation from ‘optional’ to ‘mandatory,'” said Dan Richards, CEO of Global Rescue.
These are not the only popular add-ons. Travelers also purchase international legal assistance through companies such as Legaroo. Or they can purchase a security membership through a company like FocusPoint International’s CAP Travel Medical and Security Assistance Plan.
The basic principles still apply for next year
Even with all the changes, the fundamentals still apply. (I’ve detailed this in my free guide to buying travel insurance.) “Travelers should keep in mind that travel insurance products vary,” says Rajeev Shrivastava, CEO of VisitorsCoverage.com.
And what are the basics? Compare policies before you buy. Read the policy carefully. Choose the policy that suits your needs. “And be sure to consult a licensed travel insurance expert if you have any questions,” adds Shrivastava.
More changes lie ahead
Like the travel industry itself, travel insurance has its surprises. Whether it’s an insurance technology company innovating or new policy limits due to a pandemic, you never know what to expect.
“We’ve seen a flurry of updates and changes to plan benefits and eligibility,” said Pallavi Sadekar, chief operating officer at VisitorGuard.com.
For example, one popular visitor travel insurance plan just updated its eligibility and coverage renewal terms for 2023. From now on, a traveler no longer qualifies for new cover if a stay in the destination country has exceeded 365 days.
“It is not unusual for travel insurers to introduce new coverage and plan types,” says Chris Carnicelli, CEO of Generali Global Assistance. “Especially in recent years.”
Experts predict most of the surprises will be positive for 2023. But this two-part series will help you navigate the unpleasant ones.