Doris Hoffmann has her sights set on a river cruise in 2023. And like so many travelers, she plans to pack a reliable travel insurance policy.
But which one?
“I was hoping to get some information about the companies and their claim payment history before I make a decision,” says Hoffmann, a nurse from Winter Springs, Fla.
Fortunately for Hoffmann, both companies have excellent customer reviews and pay their claims promptly.
In many ways, Hoffmann is a typical travel insurance customer. She’s aware of the potential dangers but also careful about choosing a travel insurance company for her purchase. And there’s the added uncertainty for 2023, as a possible recession, more geopolitical trouble and the continuation of the pandemic add to traveler worries.
“Consumers have a heightened awareness and understanding of travel insurance because of the pandemic,” says Beth Godlin, president of Aon Affinity Travel Practice. “And, along with that, there’s an increased focus on protecting their financial investment in travel as well as their health, safety and security.”
What’s different about 2023 for travel insurance?
In part one of this series, I asked if you need insurance next year (short answer: You probably do). But what are some of the trends shaping travel insurance in 2023? What are some of the things would-be travel insurance customers need to know? I asked the experts.
“Travel is changing,” says Christina Tunnah, general manager of marketing and brands at World Nomads. “Prices are rising, which reflects both increased demand along with supply constraints, and inflationary pressures in the economy generally. And this means that travelers need to ensure they have the right level of coverage before they leave home.”
A recent survey of U.S. travelers showed that travel intent over the next 12 months is increasing. Last June, 67% of travelers said they were ready to travel. But by September, it had risen to 74%.
“Moving into 2023, the travel industry continues to rebound,” says Megan Prescott, a product manager at AXA Partners U.S. “There is no doubt the travel landscape has shifted, including an increased interest from travelers in protecting their trip investments. Trip delay benefits are becoming more sought-after as travelers are experiencing a higher frequency of flight cancellations and delays. This trend will likely continue until the airline industry has fully recovered, which could be as late as 2024.”
So what does that mean for travel insurance in 2023? Here’s what experts said:
More people will need travel insurance
“Travel is getting more and more expensive,” says Laura Heidt, the insurance desk manager at Brownell Travel. “So the investment is higher, and they are interested in protecting their investment.” It’s gotten to where insurance is a must-have for trips costing more than $3,000. The average price of a domestic roundtrip airline ticket hit $397 in the latest available quarter, the highest level in eight years.
As a result of the higher prices and the added uncertainty, more people are buying travel insurance. According to Joe Cronin, president of International Citizens Insurance, only about 35% of American travelers bought travel insurance pre-COVID, and then only for big trips. “Now, around 80% of Americans protect their trip and their health with travel insurance.”
Melissa Downham, a luxury travel advisor and founder of Roaming Travel Co., says travel insurance used to be an afterthought. Now, it’s one of the first things she discusses with her clients.
“Since 2020, my inquiries about travel insurance have gone from about 10% of clients to probably 90% of clients,” she says.
It will be easier to understand your travel insurance policy in 2023
One promising development this year: It’s gotten easier to know what’s in your travel insurance policy. That’s the assessment of John Rose, chief risk and security officer at ALTOUR. “The top insurance providers such as AIG and Chubb have done a fantastic job explaining coverage,” he says. “Travel advisors and customers understand the policy wording more effectively.”
So if you’re buying travel insurance in 2023, expect to be a little less confused by the policy. But it will still be a dense read.
Here come the insuretechs — and their parametric benefits
New insuretech companies are changing the industry, too. Companies like battleface, which offer more customization options and provides its own 24/7 emergency travel and medical assistance service, are making travel insurance more responsive and user-friendly.
“New insurtechs have hit the scene with faster claims resolution processes,” says Elad Schaffer, CEO of Faye Travel Insurance. The innovations include real-time reimbursements directly to your phone and a digital wallet that allows you to buy food and other necessities when there’s a long flight delay.
These instant reimbursements are called parametric benefits.
Angela Borden, a product strategist at Seven Corners, says these benefits will be big next year. “For 2023, we expect to see an increase in parametric benefits, which provide a real-time claims solution for travelers by verifying triggering events as soon as they happen and then paying the stated benefit amount,” she explains.
Travel insurance bundles are “in”
This summer’s unprecedented flight delays have made bundled travel insurance products more popular, according to Berkshire Hathaway Travel Protection (BHTP). It has seen sales of products like ExactCare Extra soar since the beginning of the summer. “The forecast of continued “flightmares” through 2023 will shed more light on flight inconvenience benefits,” says Carol Mueller, BHTP’s vice president.
But she says travelers should take time to review every benefit before they buy a bundled insurance product. “Always talk to your travel agent or the travel insurance provider directly about your concerns around covered reasons for cancellation or what’s covered when on the trip,” she says.
Travel insurance may not be enough in 2023
One of the biggest changes experts anticipate is that more travelers are not relying exclusively on travel insurance.
“We’ve seen a growing popularity of consumers purchasing travel insurance for the comprehensive benefits in trip cancellation plans and then purchasing a separate emergency medical evacuation membership, which is not considered insurance,” explains Stan Sandberg, the co-founder of travel insurance site TravelInsurance.com.
Sandberg says travelers are also buying medical evacuation memberships from Medjet Assist or Covac Global, which he says are a cost-effective way to have a specialty air ambulance service available to transport you back home in the event of a hospitalization while traveling. Sandberg is part of the trend. He enrolled his family of four in the MedjetHorizon annual plan, which also offers travel security services and crisis response.
“Traveler preferences have moved travel protection for emergency medical services and evacuation from ‘optional’ to ‘obligatory,'” says Dan Richards, CEO of Global Rescue.
Those aren’t the only popular add-ons. Travelers are also buying international legal assistance through companies like Legaroo. Or they can buy a security membership through a company like FocusPoint International’s CAP Travel Medical and Security Assistance Plan.
The basics still apply for next year
Even with all the changes, the fundamentals still apply. (I outlined these in my free guide to buying travel insurance.) “Travelers should keep in mind that travel insurance products vary,” says Rajeev Shrivastava, CEO of VisitorsCoverage.com.
And what are the basics? Compare policies before buying. Read the policy carefully. Select the policy that suits your needs. “And be sure to consult a licensed travel insurance expert should you have any questions,” adds Shrivastava.
More changes are ahead
Like the travel industry itself, travel insurance has its surprises. Whether it’s an insuretech company innovating or new policy limits because of a pandemic, you never know what to expect.
“We’ve seen a flurry of updates and changes to plan benefits and eligibility,” says Pallavi Sadekar, head of operations at VisitorGuard.com.
For example, one popular visitor travel insurance plan just updated its eligibility and coverage renewal terms for 2023. Going forward a traveler is no longer eligible for fresh coverage if a stay in the destination country has exceeded 365 days.
“It isn’t uncommon for travel insurers to introduce new coverages and plan types,” says Chris Carnicelli, CEO of Generali Global Assistance. “Especially in recent years.”
Experts predict most of the surprises will be positive for 2023. But this two-part series will help you navigate the unpleasant ones.