Travel insurers are reporting that interest in and sales of
annual travel insurance policies are soaring, a trend they attribute largely to
heightened awareness of travel insurance and the fact that consumers are taking
more trips each year, giving them an incentive to jump from a single-trip plan
to a multitrip plan.
"We absolutely see an uptick in it," Jason
Schreier, CEO of April Travel Protection, said of annual policy sales. "I
think it goes in line with a continued improvement in the overall understanding
of the travel insurance market, which is by no means mature in this country
yet."
Allianz Global Assistance is also seeing growth in annual
policies. Overall, annual policy sales are up 48% year-over-year, according to
Richard Aquino, vice president of sales. Travel agent sales of annual policies
are up 67%.
Aquino said agents are putting the product in front of
clients who take multiple trips each year, resulting in the growth of the
annual product specifically. Consumers, he said, are more attracted to annual
insurance products because they are taking more trips.
Right now, insurance comparison site TravelInsurance.com
offers just one annual policy through its insurance partners. But consumer
demand is changing that, according to co-founder Stan Sandberg.
"We've seen an increase in requests and inquiries about
annual policies, and we are going to be launching what I'd call a range of
products in annual policies from various providers," Sandberg said.
The products are expected to launch late in the fourth
quarter of this year or early in the first quarter of 2019.
For the past 18 months, travel insurer Arch RoamRight has
also seen "high double-digit increases" in annual plan sales,
according to Cory Sobczyk, vice president of business development. He did
caution that the uptick Arch is seeing could be "because of our overall
increase in market share over the past year." He added that annual
policies still make up a small percentage of Arch's overall portfolio of
products.
On the other hand, Sobczyk said, the uptick could also be
the result of increased consumer travel and a jump in travel agent sales.
"We believe travel advisers are always searching to
find the best possible way to service their travelers," he said. "In
this case, they are looking to determine if a multitrip plan is a better option
than a single-trip plan."
He added that most of Arch's clients still prefer
single-trip policies.
The differences between annual travel insurance policies and
single-trip policies vary greatly depending on the policy itself, the traveler
and the type of trip. Generally, annual policies offer coverage similar to
single-trip policies, such as trip delay and medical, but at lower benefit
levels.
Some annual policies do not offer trip cancellation
coverage, and most have annual limits on all coverage.
With annual policies, Aquino said, "the benefits come
along with pricing."
The cost of a basic annual policy with Allianz starts at
around $99 and goes up from there. A policy with better benefits might run
around $200, he said. Single-trip policies, on the other hand, tend to cost
between 7% and 10% of the insured trip's cost.
Financially speaking, Schrei-er said, annual policies tend
to make sense for travelers taking two to three trips or more each year.
"You can already get a return on your investment in
certain cases in just two trips," he said. "And I would think, for
almost anyone, you'll find the return on investment once you hit that third
trip."
Trip cancellation coverage is one of the biggest differences
between annual and single-trip policies, Sandberg said.
"The limits on an annual plan will be smaller than if
you were buying an individual plan," he said. "So if you're taking
very expensive trips in a given year, spending $10,000 or $20,000 on a trip ...
you're not going to be able to cover the trip cancellation piece, or at least
not be able to cover it 100% with an annual plan."
When it comes to commissions, in most cases agents benefit
most from selling single-trip insurance policies.
"There's definitely more financial reward for the agent
if they are selling a per-trip product, because a per-trip product is going to
be more expensive, but it's going to cover more," Aquino said.
However, he said he believes agents are looking more at what
most benefits their clients in the end, and today they are offering a suite of
product options, including annual policies; hence the uptick in annual policy
sales.
Schreier also pointed out that annual policies offer agents
another reason to get in touch with clients throughout the year when their
policy is set to renew.
Most agree that single-trip policies will likely remain the
dominant insurance product, but annual policies will continue to see
popularity. Sandberg, who forecasted continued growth in annual policies,
described it as insurance that will "represent a niche or a specialized
kind of traveler."
Schreier said, "I don't think it's a trend. I think it's
a foreshadowing of what's to come."