What’s happening in NZ travel insurance?

What’s happening in NZ travel insurance? | Insurance Business New Zealand

Travel

What’s happening in NZ travel insurance?

Bosses share trends currently shaping the market

Travel

By
Terry Gangcuangco

With travel having a resurgence following the COVID lull, travel insurers are seeing some key trends in the market – they share them here with Insurance Business.

Claims numbers on the rise

“The key sign that travel is getting back to normal is the number of medical and evacuation claims we’re now receiving from customers,” Southern Cross Travel Insurance (SCTI) chief executive Jo McCauley (pictured left), who herself has just broken a three-year travel hiatus by visiting her family in the UK, told Insurance Business.  

“Thirty-nine per cent (39%) of our international claims relate to situations where customers have been hurt or have fallen ill outside New Zealand and require support in their holiday location, or even transfers back home… From time to time there are serious situations where customers need to be ‘medevacced’ back to New Zealand, and the costs can be substantial.”

McCauley, whose camp analysed SCTI’s sales and claims data from January to June 2023, said air ambulance and related costs have risen significantly compared to prior the pandemic. One particular claim, involving a policyholder who suffered a head injury while travelling in the US, had total costs amounting to $1.2 million.    

For Allianz Partners New Zealand, it’s been a similar claims experience in terms of volume and value.

CEO Kevin Blyth (pictured right) said: “We are certainly seeing more claims and bigger claims. We’ve not got flights back to that same volume to where someone may have needed say, for example, a lie flat bed in business class to repatriate them from somewhere. Whereas that would previously be fairly easy to get, that can be quite difficult to get now.

“So, our people who work with those medical repatriations – they’re having to do a lot more work and a lot more looking into how they get people back as a lot of flights are full.”

Appetite for travel

According to McCauley, there’s a strong appetite for travel despite certain considerations.

“At the end of the day, many of us are keen to get travelling again,” she said. “We know that the cost-of-living could be having an impact on the travel decisions we might be making – for example, reducing the time away, making trade-offs in the quality of accommodation we’re prepared to put up with, or making fewer trips – but the national appetite for travel appears to be as strong as ever.

“We simply caution Kiwis to make sure that as they get back up and out there, they consider travel insurance as essential.”

It appears that, given the appetite for trips, added costs are not stopping travellers in their tracks.

Blyth told Insurance Business: “There’s always talk about inflation and the cost-of-living crisis, but you’ve still got that group of people who are absolutely hell-bent on travelling. What we’re seeing now is it’s getting much, much easier for people to get around. There are more flights. They’re not quite back to the same numbers pre-COVID, but you’ve got an awful lot more flights.

“So, it’s easier for people to get about in spite of inflation. It’s still expensive, and people do seem to be willing to pay that extra expense to travel. If you look at what it used to cost you to get to Australia, now it’ll cost significantly more than that… So, we’re seeing a lot of that. But what we’re also seeing is people who are starting to book further out than they would have before.”

Naturally, the growing number of people back in the air is translating into insurance sales.

“We’ve all seen so much commentary around airlines coming back to New Zealand and flights chockablock pretty much everywhere as people get back into travelling,” McCauley said. “We’re seeing that change reflected in our sales which have been consistently strong since borders reopened, and especially over the last few months.

“Growth is across every travel insurance product we offer, from International Comprehensive and Working Overseas, to helping families reconnect with our Visiting New Zealand product as well as international students who we’re supporting with insurance as they return to Aotearoa to study.”

Destinations and themes

So, where are Kiwis flying to?

“The most popular destination, still, for us, is Australia,” Blyth, who is flying to Melbourne soon, noted when he sat down with Insurance Business. “That’s followed by Europe and then Asia.”

Meanwhile, citing SCTI data, McCauley said: “The top six destinations for our customers who are travelling for pleasure are Australia, coming in hot at 47%; the UK and USA at 12%; Fiji at 11%; Singapore and France at around 7%; and Italy coming at 6%.”

Globally, Allianz Partners is seeing a trend called “TV tourism,” which influences where travellers are putting their map pins when setting their target places to visit.

“Joe Mason, who’s our global chief marketing officer for Allianz Partners, has been talking about some of the specific trends that we’re seeing just now,” Blyth said.

“He’s talking about the TV tourism concept. A lot of people are choosing to go where something on Netflix was filmed or where a TV show was filmed. It’s inspiring people to travel, and we’re starting to see a lot of that now, globally, with Allianz Partners.”

TV tourism may have been borne out of the rise of streaming services, but it’s not an entirely new phenomenon. The Lord of the Rings fans will be quick to point out how the same concept has benefitted New Zealand tourism for years.   

“We’re also seeing a lot more of multi-generational travel than we were before,” added Blyth. “A lot of people are now saying, ‘OK, let’s go on holiday with a partner but we’ll go with mum and dad and auntie and uncle as well’. We’re seeing more of that, with families wanting to do things together rather than alone. The third one is around sustainable travel, and that’s people being concerned at where they go and how they get there.”

Wherever people may be travelling, or how, appropriate insurance must be among the ‘must haves’.

“More people are taking out travel insurance because off the back of COVID they saw the need to,” Blyth told Insurance Business. “There will come a day when people will forget about COVID and they will revert back to how they were before. So, it’s important that the industry makes sure that people know the importance of what it is that they are buying.

“So, it’s not just for COVID. What if you have to cancel for another reason? What if you get sick while you’re away? What if your luggage is stolen? There’s all those other things that people need to take into account. And I think when we had the flooding and then the cyclone, that was something else that triggered people’s memories that said it’s not just for COVID that we’re having travel insurance.”

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