Mike Nelson, Author at Global Trade Magazine

As seasonal trends and demand patterns in the travel market begin to take a more familiar shape after three years of being dominated by the pandemic’s influence, we can see which aspects of travel have fundamentally changed since 2020. One of those is the prevalence, popularity, and outright necessity of travel insurance.

This makes natural sense. Covid-19 has made consumers more inclined to purchase travel insurance to protect their trips from illness, rebooking and cancellations. The huge travel demand spike in the early summer of 2022 was accompanied by a corresponding rise in flight cancellations, missed connections, lost luggage, and interrupted trips, further underscoring travel insurance’s value. Travel insurance is a natural, rational hedge against uncertainty and instability, neither of which has been in short supply over the past few years.

Travel insurance sales and selection soar

Recent travel insurance sales and attachment metrics support the notion that travel insurance is a greater priority for travelers than ever before. While the latest official figures from the United States Travel Insurance Association (USTIA) show that Americans spent approximately $1.72 billion on all types of travel protection in 2020 – a drop-off from previous years due to the pandemic’s impacts on leisure travel, other industry sources show a considerable rise in travel insurance adoption as travel has resumed.

Battleface, an international travel insurance provider, found that while only about 20% of American travelers bought travel insurance before the pandemic, nearly 60% now purchase it. Similarly, Squaremouth, another global travel insurance provider, reports that 79% of travelers are selecting trip cancellation coverage in 2022 compared to 60-65% pre-pandemic, and overall policy sales were up 180% year over year in June.

We see similar patterns on the arrivia booking platforms across multiple travel products. We saw a significant spike in travel insurance attachment rates for air bookings in the second half of 2021 as air travel resumed and more modest year-over-year increases in recent booking periods. Customers who book cruises are even more inclined to purchase travel insurance – attachment rates for cruises are about 50% higher, on average, as for air bookings, according to our platform data – and this coverage saw a double-digit YOY increase in a recent booking period as well.

Travel insurance is table stakes

It’s clear that travel insurance is now a permanent fixture of the travel experience and is an important consideration as consumers book their trips. What does that mean for loyalty programs, financial services brands, and other organizations offering travel rewards or booking capabilities?

First, travel insurance must be among the options made available to members and customers. It should be prominently featured and easily attachable to any booking, particularly for high-dollar-amount options like cruises and flights. Travel insurance helps people feel safe and offers reassurance to travelers who are all too aware of the potential for disruption and lost opportunities.

It also means there’s an opportunity to increase ancillary revenue or redemptions by offering travel insurance as an option. As overall travel booking volumes continue growing, adoption metrics suggest that the demand for travel insurance will continue to rise alongside it. That indicates the potential for additional ancillary sales for programs and organizations that offer travel insurance as an add-on for purchase and the opportunity to boost redemption rates for those that make travel insurance redeemable for points or miles. The revenue benefits are apparent; the redemption benefits can help loyalty programs reduce their points liability and increase engagement among members.

Lastly, it means companies and organizations should seek a travel benefits provider that includes a travel insurance offering on all travel products. At arrivia, we work with the world’s most reputable travel insurers to provide a broad range of coverage on cruise, air, hotel, resort, car rental and tour bookings. Travel insurance options are fully integrated into our platform and, like all our products, can be deployed seamlessly under our customers’ branding.

Our ability to be a one-stop-shop – providing both the travel options and value travelers demand, as well as the ability to protect their bookings with robust insurance – sets us apart from other travel benefits providers and helps our customers deliver more complete and positive travel experiences to their customers and members.

The appeal of travel insurance is a legacy of the pandemic that will impact the travel market for the foreseeable future. Is your organization prepared for this new normal?

About the author

Mike Nelson is arrivia’s Chief Executive Officer. Prior to arrivia, Mike was the Chief Executive Officer, Americas, for the international insurance company Allianz Partners’ Global Travel division.

With less than a week until the start of autumn, industry leaders are eagerly awaiting the National Highway Traffic Safety Administration (NHTSA) guidelines on autonomous vehicles, which are expected “by the end of summer.”

NHTSA Administrator Mark R. Rosekind stated on July 20, 2016, that he “strongly believe[s] that the DOT and NHTSA are well-positioned to very soon unveil strong highly automated vehicle guidance that will lay the path to the safe deployment of lifesaving technologies,” and that the guidance “is being reviewed, tweaked, and perfected as we speak.” But what can the auto industry expect from these guidelines?

Broadly speaking, the guidelines are likely to highlight the NHTSA’s support for autonomous vehicles and the agency’s belief that these technologies are integral to the future of auto safety. The NHTSA and Rosekind have been highly supportive of automated driving technology in the past, citing the improvements that autonomous vehicles could make to auto safety and quality of life. For example, Rosekind has noted that autonomous vehicles are likely to reduce roadway fatalities and prevent intersection accidents, grant independence to disabled persons in their personal vehicles, and relieve drivers of their responsibilities behind the wheel. Given the NHTSA’s praise for autonomous vehicle technology, the guidance is likely to encourage and allow for the rapid roll-out of autonomous vehicles into the marketplace.

The guidelines are also likely to be more of a concise and forward-thinking framework, designed for flexibility and adaptability over time, rather than an exhaustive set of highly detailed regulations. As Rosekind hinted, “those expecting the DOT and NHTSA to issue 16,000 pages of regulations in the coming weeks will be disappointed, or perhaps more likely, relieved.” Instead, Rosekind has described the anticipated guidelines as “nimble and flexible, able to keep pace with technological innovation.” Industry leaders should expect guidance that is appropriate for autonomous vehicles, but that will be capable of stretching to cover the next big technological development that’s just around the corner.

More specifically, Rosekind stated on August 3, 2016, that the guidelines will cover performance standards for autonomous vehicles, guidelines for states to encourage uniformity and consistency in the regulation of autonomous vehicles, and new tools that the NHTSA hopes to use in its own governance of autonomous vehicles.

What Rosekind’s statements also make clear is that industry leaders should expect informal guidance rather than formal rules. The NHTSA considers this a positive—it allows the agency to release the guidelines more quickly and update them more efficiently in the future. But the guidelines will not have the same force or authority as formal rules and regulations in the context of enforcement. It may also mean that the NHTSA will rely more heavily on voluntary agreements in the industry in the near future, like the voluntary commitment by automakers to make automatic emergency braking a standard feature by 2020.

There are a few hot topics that industry leaders should not expect to be covered by the guidelines, such as the impact of autonomous technology on insurance. The guidelines are not anticipated to address issues such as how insurers and insurance regulators can or should adapt to either partially automated or fully autonomous vehicles, or how to adjust our current system of allocating legal responsibility for vehicle operation in a driverless world. Also, with the NHTSA expected to release separate cybersecurity guidelines in the coming weeks, these guidelines are not likely to include specific guidance on cybersecurity issues impacting autonomous vehicles.

The use of automated vehicle technology in the U.S. is rapidly increasing—and in fact is already in use far more than people realize. Guidance on a state and national level is crucial to proactively resolve conflicts, guide auto manufacturers and others in the industry, and protect consumers during this technological shift. The NHTSA guidelines should be expected to help, and not hinder, the roll-out of autonomous vehicle technology, but should not be expected to answer every question raised by this technology. Regulatory action is needed, and these highly anticipated guidelines are merely a single step in the right direction.

Mike Nelson is a partner and Kara Ford is an associate in the law firm Sutherland, Asbill & Brennan LLP.

The Importance of Protection: Travel Insurance in the Post-Pandemic Era

most viewed today