Travel is back, bigger than ever. But in a world where the cost of living continues to soar, many travellers are opting for budget-friendly insurance policies, leading to a hidden headache for insurers. As individuals prioritise affordability, they’re choosing policies with limited coverage or even deciding to forgo insurance altogether. This trend exposes insurers to heightened risks, including an upsurge in claims, adverse selection, and disgruntled customers.
We take a look into the potential consequences faced by insurers when travellers prioritise cost over adequate travel insurance. From the surge in claims to the complexities of pricing, we explore the hidden headaches that insurers must navigate in the face of cheaper insurance and the strategies to help mitigate increased risks this travel season.
- Increased Claims
Choosing cheaper policies or policies with inadequate coverage can lead to higher out-of-pocket expenses for individuals when emergencies or unforeseen events occur. Consequently, insurers experience a surge in claims, specifically for expenses that comprehensive policies would typically cover. This heightened claim frequency places financial strain on insurers, affecting their profitability.
One way to tackle this challenge is through claims cost stability. Resolving claims promptly and accurately is crucial for both you and your customers. Our GB claims experts are equipped with robust system controls, ensuring every claim is addressed swiftly, accurately reserved, and determined in line with the policy wording. This approach enhances customer experience while reducing claims leakage and overall costs.
With our commitment to efficient and accurate claims handling, we aim to minimise the financial impact of cheaper policies, providing better outcomes for everyone involved.
- Higher Claim Denials
Opting for cheaper policies offering limited coverage puts individuals at risk of claim denials or limitations when they seek assistance. Insurers encounter a rise in dispute instances and dissatisfied customers, potentially leading to reputational risks. The repercussions of denied claims can be far-reaching, negatively impacting customer trust and insurer-client relationships.
One effective solution is to emphasise the importance of comprehensive coverage to travellers. Educating customers about the potential risks and limitations of cheaper policies can help them make more informed decisions when choosing insurance. Implementing clear and transparent communication throughout the insurance purchasing process is also essential. Ensure that policyholders fully understand their chosen policy’s terms and conditions, inclusions, and exclusions. Offer easily accessible channels for customers to ask questions and seek clarification on their coverage.
By focusing on education, personalised advice, and transparent communication, insurers can reduce the likelihood of claim denials and, in turn, enhance customer satisfaction and trust. Ultimately, this approach contributes to stronger insurer-client relationships and a positive reputation within the industry.
- Customer Dissatisfaction and Trust Issues
Insufficient coverage or denied claims contribute to customer dissatisfaction and undermine trust in the insurance industry. When individuals realise their cheaper policies do not offer adequate protection, their confidence in insurers wanes. This loss of trust may make them hesitant to purchase travel insurance in the future, affecting insurers’ customer base.
To address these trust issues and enhance customer satisfaction, quality customer service becomes a key solution. By prioritising open communication, prompt claim resolution, and a genuine commitment to meeting customer needs, this will rebuild and reinforce trust in the insurance industry.
At Gallagher Bassett, we pride ourselves on premium customer experience. Our unwavering dedication to our clients and their customers is supported by a unique service framework and a can-do culture that places customer satisfaction at the forefront of everything we do. Our focus on providing tailored and transparent customer experiences ensures that our insureds always come out on top, even in challenging situations.
- Pricing Challenges
Insurers encounter difficulties in setting premium rates if a significant portion of the market opts for cheaper policies. Inaccurate risk pricing may lead to pricing inefficiencies, necessitating premium increases for comprehensive policies or potentially disrupting the market. Striking a balance between affordability and comprehensive coverage becomes a pressing concern for insurers.
Adopting a customer-centric approach that considers the evolving needs of travellers is one way to mitigate this risk. Insurers should explore innovative pricing models that offer tiered coverage options, allowing customers to choose plans that align with their specific requirements and budgets. By providing clear and transparent information about the coverage limitations of cheaper policies, insurers can help travellers make informed decisions and manage their expectations.
- Need for Education and Communication
Insurers must invest in educating consumers about the importance of selecting the right travel insurance and the risks associated with cheaper alternatives. Clear communication and policy information enables individuals to make informed decisions and understand the value of comprehensive coverage. By effectively educating consumers, insurers can mitigate the risks associated with inadequate coverage and foster a better understanding of travel insurance.
Partnering with a global player allows access to an unrivalled talent pool of dedicated carrier practice experts. Quality claims management starts with quality people and Gallagher Bassett is home to the best. Our claims professionals have deep technical expertise across all lines of coverage to assist with scalability and adaptability. Contact our team of experts and find out how we can help you navigate these hidden headaches and evolving customer expectations this travel season.