AIG Europe said travel companies that choose to award contracts to insurance partners based on price alone could be undermining the long-term success of the product and damaging the core travel brand.
The company has urged travel companies to look at the whole package on offer when awarding contracts.
Successful travel insurance schemes have become an important income stream for many companies as they enhance brand perception and increase customer loyalty and retention, said AIG.
But difficulties can arise when schemes do not prosper, the company said. In some cases schemes can fail altogether, it warned.
AIG warned companies to look at various factors when awarding contracts. It listed these as:
·Customer service
·Strong product range
·Sales support
·Stability
·Added value.