Geri Bain looks at the growing travel insurance market and assesses the benefits to both clients and agents
More than 152 million Americans bought travel insurance in 2014, spending more than $2.2bn — up 17.5% from 2012, according to the US Travel Insurance Association (UStiA). Trip cancellation/interruption benefits account for more than 85% of the sales; travel and medical evacuation for about 7%.
“Travel insurance is a good source of revenue, but that’s not why agents should sell it,” says Adamarie King of Connoisseur’s Travel. “You have a huge responsibility (to protect your clients) and travel insurance has to be part of your normal process at the beginning of a booking.”
One in six Americans’ travel plans have been impacted by medical conditions and other issues, reports the UStiA. But it’s not only their health that can force clients to cancel or interrupt trips. “There can be emergencies involving children or elderly parents,” says King.
Offering travel insurance isn’t just a service to the client, says Eben Peck, ASTA’s senior vice president of government and industry affairs. “Consumers have sued their travel agent for not offering insurance. Most travel industry attorneys recommend that travel agents sell insurance or obtain a signed waiver with every travel sale, as does ASTA.”
ASTA.org provides members with a sample insurance waiver form and Peck notes that agents can buy insurance for themselves to protect their commission should their customer cancel. However, it’s important that travel insurance isn’t confused with Cancel for Any Reason and other waivers, warns Richard Aquino, vice president of sales, Allianz Global Assistance.
“These waivers are quite limited for post-departure coverage. But travel insurance can protect customers from losses resulting from supplier defaults, canceled trips, lost baggage, and medical emergencies. And with the trend towards more far-flung, less-developed locales, travel insurance is even more important,” he says.
Because insurance products can be very complicated, experts advise travel agents to refer clients directly to their insurance provider with any coverage questions they may have.
Until a few years ago, each state regulated travel insurance differently. Some treated travel agents as professional insurance agents, requiring fingerprinting and licensing. The red tape, licensing costs ($5,000 for a typical agency with clients in four states), uncertainty and risk of fines were driving some travel agents to forgo offering insurance to their clients — “that’s harmful for both agents and clients,” says Peck.
That’s why ASTA has been working with the UStiA to lobby states to allow travel agencies to be registered under the travel insurance provider’s license, says Peck. To date, 42 states plus the District of Columbia have adopted the new standard.
Nevertheless, until all states come on board, agents should consult with their travel insurance provider and/or attorney for guidance on their specific obligations.