Buyers of travel insurance are taking greater care over how they buy cover. Andy Akerman explains
Traditionally the vast majority of us would purchase travel insurance from a travel agent when booking a holiday. However, new data from a recent report on travel insurance shows how that habit is changing.
According to the latest Consumer Intelligence survey of travel insurance, people are now spending more time researching their options and shopping around.
People now travel abroad more frequently than ever before, which means that catering for the most popular methods of purchasing is now more crucial than ever.
Consumer Intelligence found that only one in five (20%) of us now purchase travel insurance from travel agents and now nearly a third of us (32.5%) go directly to insurance companies.
The survey also shows another important change in buying trends relating to the product itself. This year, over 47% of consumers are buying annual policies - rather than single trip policies. This method of purchase is another factor that is taking business from travel agents. Increasingly shrewd consumers are taking out family coverage - over 76% of policies bought were for two or more people and 20% were for four or more people.
The major factor driving people to annual policies is price. Of the 4,906 people surveyed who have travel insurance with Go and Direct Travel, 82% and 76% respectively moved to these companies because of price.
These figures are in marked contrast to American Express, which attracted only 20% of its customers by price. But 60% went to American Express for better cover and better service.
So is there a trade-off here between price and quality of service? It would appear not. The survey went on to rate service and all three companies were in the top ten of the 31 companies surveyed - Direct Travel (1st), Amex (5th), and Go (10th). Furthermore, results concerning which consumers would recommend their existing provider to friends also support this argument.
Once again Direct Travel and Go feature in the top ten along with the likes of RBS, The Post Office and Sainsbury's.
Therefore, in a market that is now driven by well-informed consumers, suppliers - especially travel agents - must compete more aggressively to provide a better price, better service and better cover. These are the reasons why people are changing providers and buying policies independently.
The Consumer Intelligence survey was carried out online in June 2004. The aim of the survey was to identify consumer trends, which travel insurers could use to strengthen their relationship with customers and improve their overall proposition.
Andy Akerman is with Consumer Intelligence
Top 10 travel insurance companies rated by price, service & cover
1 Direct Travel
2 Royal Bank of Scotland
4 Direct Line
6 Post Office
7 Sainsburys Bank