In a Very Competitive Market, Travel Insurers Need to Improve their Underwriting Methods and Tackle Fraud at the Point of Sale

Following the advent of the aggregator sites, the travel insurance industry has reacted by reducing prices, cutting out benefits, raising policy excesses and implementing a blanket no-cover of pre-existing conditions.

Serge Corel explains, “The motor, home and health insurance markets have all developed sophisticated and efficient systems to spot fraud as early as possible, such as geo-demographic risk scoring and checks on undeclared or invalid addresses, and continue to adapt to meet market needs.

“Much can also be learnt from the growth in telematics. The motor insurance market is taking the lead in harnessing this new technology to monitor driver behaviour. Managed in the right way, telematics can be used to encourage consumers to do the right thing. This way, insurers can reward certain behaviours with lower premiums, boosting customer relations and tackling the ever-growing issue of fraud. What could be done by travel insurers to incentivise certain behaviours?”

The motor insurance market in particular has made great strides in adjusting premium prices depending on the individual risk to better protect motorists and the industry. In contrast, the travel sector has failed to take the same precautions, with little or no progress made on underwriting.

Serge Corel concludes: “The travel insurance market culture suffers from an ethos of ‘why change?’ but rising cases of fraud and increased competition dictate that processes and underwriting must change.”