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As attendees of the American Society of Travel Advisors’ (ASTA) Global Live conference geared up for the association’s first-ever digital convention this week, they also got a crash course in a segment of the industry that many travel advisors find especially daunting right now: travel insurance.
During a pre-convention session that took place Aug. 19, representatives from three major travel insurance providers came together to debunk common misconceptions, discuss future policy changes and educate travel advisors on the ins and outs of selling travel insurance. The panel discussion featured Scott Adamski, head of field sales and licensing for Travel Guard Insurance; Kevin Herlihy, sales manager for national and key accounts for Travel Insured; and Suzanne Lustig, director of national accounts for Allianz Global Assistance. The discussion was moderated by Megan Cruz, executive director of the U.S. Travel Insurance Association.
Here’s what these experts hope travel advisors understand about selling with a third-party travel insurance provider.
Travel advisors are not expected to be policy experts.Prior to 9/11, the acceptance rate for travel insurance by U.S. travelers was in the single digits, according to Adamski. However, as with any crisis, he is seeing more clients come to travel advisors with questions about insurance. A spike in insurance sales as a result of the pandemic has pushed this figure to about 30-40%.
“I think [travel insurance] will be as instrumental to the traveler in the next few months as hand sanitizer and masks,” he said.
I think travel insurance will be as instrumental to the traveler in the next few months as hand sanitizer and masks.
“Advisors are going to need our help now more than ever when having a conversation with a client,” Lustig added. “They should reach out to their representatives and find out what tools we each have that can help with that conversation. Travel advisors don’t have to memorize every single policy and regurgitate it, nor do we want them to. But we do we want our partners to have enough education to have the conversation in a confident way.”
Adamski noted that in many cases, travel advisors are not licensed to offer an in-depth review of policy language, exclusions or limitations.
“Some states have licensing requirements,” he said. “And some states do have a travel retail monologue that allows the advisor to provide some level of information. However, if there are in-depth questions coming from clients, all our operations are open 24/7 and we have licensed personnel to answer those questions.”
Herlihy suggests picking one or two insurance providers to partner with, and learning their specific product line as much as possible.
“If you do that, you’re going to sell more, and your clients are going to trust you more,” he said. “Most travel advisors lean toward one cruise line or another, and you push clients there. Do the same with a travel insurance provider.”
Most travel advisors lean toward one cruise line or another, and you push clients there. Do the same with a travel insurance provider.
Some companies, such as Travel Guard Insurance, offer individual trainings and advisor academy courses via 15-20-minute sessions that educate agents on the portfolio.
“You don’t need to be the expert, and in most cases you aren’t licensed to do that,” Herlihy said. “We are, and we’re available 24/7.”
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Buying a CFAR policy does not mean the client will receive a 100% refund.After the COVID-19 outbreak, Cancel for Any Reason (CFAR) policies quickly gained widespread appeal. At Travel Insured, for example, CFAR coverage went from encompassing 10-12% of the business in mid-March to between 40-50% of the policies bought in April, and it hasn’t waned since.
Advisors should note that this optional coverage costs an additional premium, Adamski of Travel Guard Insurance said, and it’s important to remind clients that most company’s policies will return 50-80% of the funds lost, rather than the full cost of the trip.
“We [at Travel Insured] offer 75% of your loss back, and the key words are ‘of your loss back,’” Herlihy said. “If the trip is $10,000 and they lose $10,000 and have CFAR, clients will get up to $7,500 back. But if they spent $10,000 and their loss is $5,000, the travel insurance company is going to pay 75% of that $5,000 back to the client.”
While some providers have recently done away with CFAR policies or haven’t provided changes to them, others, such as Allianz, have amended them due to the pandemic. For example, the company’s Cancel At Any Time product excludes epidemics, but due to the current crisis, Allianz has liberalized other plans to include COVID-19 coverage.
Additionally, a former version of CFAR allowed clients to purchase the policy until the final payment was made, but they can now only purchase CFAR policies up until the first trip deposit.
“CFAR is a risky product for everyone,” Lustig said. “At Allianz, we didn’t build it for a catastrophe like this. It was built based on the fact that people have odd reasons why they may need to cancel.”
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Country-mandated insurance may not offer full coverage.Some of the latest countries to open to tourists — such as Aruba and most recently, Costa Rica — mandate proof of travel insurance for all visitors entering the country.
However, in the case of both, travelers must purchase a specific plan approved by the government to enter the country.
“We applaud countries for protecting themselves in this environment, and it’s totally understandable, especially for small island nations,” Lustig said. “That scenario isn’t going to go away anytime soon. My advice and best practice to share is to understand what’s required of that destination at the time you’re making a booking, and also look at your preferred partners’ available plans to help you navigate that.”
However, advisors should be sure to offer clients supplemental policies to cover all the bases; when visiting Aruba, for example, clients purchasing The Aruba Visitors Insurance plan will not have medical evacuation covered.
“We don’t want anyone thinking that if they buy the plan from, say, Aruba, that they’re getting the same coverage that they would if they are buying from one of us,” Adamski said. “The coverage they are giving you is minute and limited.”
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Supplier protection plans don’t cover the operation’s financial demise.When a supplier becomes financially distressed and files for bankruptcy or closes its doors — as we’ve already seen with foreign airlines and some tour operators — supplier-offered protection plans won’t help the consumer.
Because insurance companies vary on the ways they handle a supplier who goes out of business, Lustig recommends advisors contact the sales department of respective third-party insurance companies, such as Allianz, to be walked through potential coverage options and coached on how to best present policies to the client.
“When your client purchases that supplier protection plan, it typically never covers default,” Lustig said. “By definition, a supplier cannot protect against its own demise, which is a primary reason to be considering third-party insurance.”
But waiting until a supplier has announced its closure is not the time to seek coverage, Herlihy added, noting that there’s often a waiting period of at least 14 days before coverage sets in.
Don’t expect major changes to insurance plans anytime soon.Where a tour operator or cruise line may more easily pivot their products due to COVID-19, any large changes made to travel insurance products will be slower to come to the market due to heavy regulations from state insurance departments, Adamski said.
“It doesn’t happen quickly because we have to file and get approval in most states with any changes to our products, our pricing, our coverage and more,” he said. “All those things need to be approved by 51 state insurance departments, including Washington, D.C. So, we can come up with ideas and innovations, but to get them approved is another situation altogether.”
The DetailsAmerican Society of Travel Advisorswww.asta.org
Allianz Global Assistancewww.allianztravelinsurance.com
Travel Guard Insurancewww.travelguard.com
U.S. Travel Insurance Associationwww.ustia.org