Moneycontrol
Aug 11, 2017 05:27 PM IST | Source: Moneycontrol.com

Travel insurance becomes cheaper by 15-20% to get more customers to opt for it

The next time you book your flight tickets to go on a holiday, you may notice that your travel insurance prices are even cheaper. From an average premium of Rs 200-250, the prices are falling even further by 15-20 percent.

M Saraswathy @maamitalks

The next time you book your flight tickets to go on a holiday, you may notice that your travel insurance prices are even cheaper. From an average premium of Rs 200-250, the prices are falling even further by 15-20 percent.

Domestic travel insurance has a penetration of less than 5 percent, meaning less than 5 percent of total air travellers take the product while purchasing a ticket. General insurance companies tried both the travel agent route as well as the online travel aggregator’s route but sales have been dismal.

“Agents are seeking a commission which is higher than the cost price. This is not a sustainable business model. Hence, we are looking to cut prices further," said the head of underwriting at a mid-size general insurance company.

While applying for Schengen visa for European countries, taking a travel insurance is mandatory. This is a segment which has seen a good rate of penetration in terms of insurance sales. However, insurers have not seen a positive growth rate in policy numbers in other travel ticket purchases.

On aggregator portals, there is an option to automatically purchase an insurance policy at the time of checkout. However, a majority of customers uncheck the button while buying flight tickets.

Apart from delays and emergency medical needs, travel insurance policies also provide for coverage of air ambulance, evacuation and loss of hand baggage apart from concierge services for elderly at home when the main member is away on vacation.

The claims processes are also getting quicker. For instance, private general insurer Bajaj Allianz General Insurance has launched Travel Ezee, an application that uses blockchain technology to disburse travel insurance claims even before the claim is reported.

Here, whenever a passenger’s flight is delayed, the insurer is intimated through a partnership with a third-party aggregator and the claims are immediately processed. All that a customer has to do is click on the mobile application and fill in their account details.

In western markets, travel insurance is a must to avoid huge medical bills that can be incurred due to any sudden medical issues. "The average price of travel insurance is now only about one-third of the price of the ticket. Industry players have agreed to cut prices to get more customers to buy the product," said a senior official at a a travel aggregation portal that helps people plan vacations.
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