Co-founder and CEO, Cover Genius.
It’s no surprise that massive upheavals in the airline industry are driving demand for travel insurance and ticket reimbursement solutions.
Flight delays and cancellations have made this past summer a difficult time to travel, and these complications have left travelers and their luggage stranded. According to data from flight-tracking website FlightAware, US-based airlines 128,934 flights cancelled from early 2022 to July, an increase of about 11% from pre-pandemic rates. This trend is the result of a variety of factors, including staff shortages, extreme weather and more, and the unpredictable nature of flying leaves consumers looking for ways to protect their travel plans.
Online travel agents (OTAs) and airlines offer personalized itineraries for their journey, and most offer travelers standard travel protection at the time of booking. However, almost none offer “Cancel For Any Reason” (CFAR) protection.
Canceling for Any Reason: An Easier Solution
In my opinion, as the CEO of an insurtech company, one of the main reasons consumers are dissatisfied with travel insurance is because it’s not clear what is and isn’t covered, and often when they find out it’s too late. According to a recent survey of travelers by my company, over 27% of US respondents found that they were not covered for pandemic-related problems on their last trip, despite purchasing insurance with pandemic-related coverage. Consumers should not examine the fine print to understand the protection they have purchased. A much simpler solution is to offer Cancel for Any Reason, which, as it implies, gives the customer a refund or partial refund for cancellations up to a fixed period before departure, aided by instant refunds. Of travelers showing increasing interest adding protection to their travels, I expect CFAR to rock the embedded travel insurance industry internationally and in the United States.
A slow and outdated claims process
Traditional insurers often facilitate the settlement of claims in whole or in part offline, requiring paper forms to be sent by post or fax, slowing down the arbitration process. Even insurers that are online can take more than a week (and in most cases several) to process and pay approved claims. My company found that the average processing time for online insurers and travel providers is 11 days. These claims can be paid out as paper checks sent through the mail, causing further delays. Especially for travelers who may be visiting multiple destinations, this timeline can be annoying and cause unnecessary interruptions in their journey.
The claims process should be automated and digital to allow for faster administration and adjudication, especially during periods of high claim volume. This includes periods when travelers experience increased flight delays and cancellations, inclement weather and other unforeseen circumstances.
Automate the claim process
An automated approach to claims handling can significantly reduce wait times and passenger dissatisfaction. Companies should digitize their claims processes by integrating integrated technologies, artificial intelligence (AI) and natural language processing (NLP), or by partnering with a partner specializing in these areas. They can use AI and NLP to, for example, automate the detection of doctor’s notes, pay customers immediately when a flight is delayed by a predetermined number of hours, or pay instant refunds – no questions asked. Examples of successes I’ve seen in this area include removing data re-entry, requesting documents when filing claims, eliminating claims filing fees, generating fraud scores, electronic payments, and more .
However, it’s important to note that while technology can significantly improve and accelerate the claims experience, it takes teamwork to achieve meaningful results. Pairing technology experts with experienced insurance professionals can ensure that the solutions companies develop are both workable and compliant.
Choosing the right solution for you
To find the integrated solution that’s right for your business, it’s important to first identify your unique needs and the capabilities that allow your business to scale. To build a long runway for future growth, companies need to look for partners with global reach and who can deploy their solutions effectively and compliantly in every region. Local regulations can vary widely and by working with a partner who can resolve these discrepancies for you, you can focus your efforts on growing your business.
In addition, companies need to consider the technological suitability of potential partners and how they can benefit their business in the long run. For example, technology providers that can use data to streamline processes and identify additional growth areas are well suited to help grow your business.
It comes down to
Built-in travel protection is not a new concept; travel companies have been doing it for years. What travelers need now is insurers to step out of the way. The upheavals caused by the pandemic and disruptions to airports and airlines, the high number of vacancies and staff shortages and traveler sicknesses, and other operational challenges are all pushing consumers to demand protection in simpler ways. Travel companies and airlines need to work with the right insurtech partners to ensure they protect their customers in a way that is fit for purpose.