The travel industry is expected to return to pre-pandemic levels in 2023. Airline prices may have increased but after two years of itchy feet, millions are planning to fly regardless of the cost.
The travel and tourism industry’s GDP will reach $8.35 trillion this year and is expected to hit $9.6 trillion in 2023. We sat down with Simon Hoskin, Head of Travel & A&H, to discuss what this means for the insurance industry and the opportunities on the horizon.
Question 1: As the world transitions to post-pandemic in 2023, what will travel look like?
The Covid-19 pandemic impacted our travel sector in a way that no one foresaw, and the aftermath continues to be seen. In 2020/2021, international and domestic travel ground to a halt but 2022 saw a sharp return. As we enter 2023, it is looking to be yet another unpredictable year as we are on the precipice of an economic crisis and consumers are having to make bold choices surrounding this. That said, 2023 is likely to be another busy year for international travel as the British public has proved even in the darkest times that a holiday is seen as essential.
Question 2: With travel expected to return to the pre-pandemic level in 2023, what will this mean for insurance companies?
The world has dramatically changed due to the pandemic with holiday costs rising, inflationary medical fees, and currency fluctuations, which in turn means insurance premiums are on the rise (as well as their own costs). Insurance companies are looking at ratings and coverage closer than ever to ensure they are offering comprehensive coverage along with competitive premiums. Specific coverage was written into terms and conditions to provide coverage for Covid-19 related claims, however, the virus appears to have weakened meaning the common symptoms are similar to the common flu. It is now likely that insurers will view this as a time to remove the specific coverage and caveat that with the need for evidence from a medical professional if unable to travel.
We are also envisaging a drive to travel further afield, whereas 2022 was more Europe-centric due to the ongoing uncertainty of post-covid travel. Border controls now appear to have softened meaning the confidence towards North America and the southern hemisphere is returning.
Question 3: What opportunity does this offer to insurance companies in 2023?
Insurers will need to be very careful with their premiums throughout 2023 as a small change to rates could price them out of the market due to the margins being so competitive, especially on the aggregators. A lot of insurers are starting to discuss value-added products, which are provided alongside their policies i.e. delay repay, airport lounge access, and concierge services. Given the competitive nature of the year ahead this will give insurers a unique selling point that will encourage customers to choose their products.
Question 4: What are some key points for insurance companies looking to expand their product lines into travel?
For insurance companies seeking to expand their product lines into travel in 2023, there are four key points that they need to consider.
These points are detailed below:
- The travel insurance sector is going through a hardening market phase due to some insurers leaving the market and customer appetite being high.
- Ensure you are offering comprehensive cover for business travel and families. Consumers have become more aware of what coverage needs to be in place for their travel plans.
- Keep premiums competitive and excesses low.
- The older age demographic is traveling more, so ensure pre-existing medical conditions are included in your coverage.
Question 5: How can partnering with Gallagher Bassett help companies take advantage of this travel growth opportunity in 2023?
With the recent Gallagher Bassett acquisition of Claims Settlement Agencies ltd, GB now has a large, experienced team of travel claims experts. We have been handling claims within this sector for over 30 years and have the industry reputation to go with it. 2023 is going to be an exciting year for our travel division, as we continue to build upon and expand our offering. 2023 will see an upgraded release of our online customer portal, eClaims. This brings with it some great features such as straight-through processing, auto-pay, and full API integration. Technology is key in the 2023 claims environment, and this will help any insurer stand out from the crowd. We also remain agile with the ability to scale at short notice due to unforeseen world events.
Contact our team today to see how your business can capitalise on the travel industry surge in 2023.