Thousands of Indian students, executives and tourists who have deferred their foreign trips due to Covid-19 will likely have to buy compulsory travel insurance policies when countries open their borders for unrestricted travel, said sector experts. Insurance companies are anticipating a massive surge in demand for such products.
Insurance cover for travellers so far had not been compulsory in most countries — those where it was mandatory included the US, Russia, Qatar, Cuba and the Central European countries. But now many countries with high ceilings on social security are making that mandatory for foreign nationals planning extended visits. Thailand and other Southeast Asian countries are reportedly mulling on making this compulsory.
“Up till now, apart from Schengen countries and the US, travel insurance was not mandatory for foreign travels,” said Tarun Mathur, a cofounder of online insurance broker Policybazaar. “Now more and more countries are planning on making this move … This is good for the industry, good for travellers. The cost of accessing healthcare is expensive abroad,’ he said.
Mathur anticipates a six-fold surge in demand for such covers when travel demand normalises.
A typical policy covers health and injury risks during the period of stay. These policies are built on indemnity-based standard health covers that are offered by insurers and cover Covid-19-related hospitalisation costs too, he said.
Most policies also have need-based riders, such as baggage claim costs and cancellation cover. Some companies are innovating with new-age riders such as “adventure sports” cover, anticipating a surge in ‘revenge travel’ demand among millennials in a post-pandemic world.
Sourabh Chatterjee of Bajaj Allianz General Insurance, one of the leading insurers innovating in this space, said modulated and need-based travel covers could become the norm.
“These covers will become more modular to fit the specific requirements of customers with a base health cover,” said Chatterjee, the head of IT, Web and travel sales at Bajaj Allianz.
Customers are now increasingly asking whether the policy would cover treatment of Covid-19 — including expenses of home quarantine — especially if one is traveling abroad, he said.
Both Mathur and Chatterjee said the business of insurance being one where “law of numbers” dictated the pricing models, they didn’t anticipate a significant rise in premiums for such covers, as a surge in demand could offset the risk-taking ability of insurers.
The travel insurance industry is pegged at about Rs 1,000 crore annually in terms of premium accrued by insurers. There is no publicly available database that captures data on travel insurance sales.
While travel insurance in India has not really kicked off due to a plethora of factors, experts suggest that this was largely on the back of low awareness and disparity in cost-benefits analysis of such covers as assumed by customers. However, early indications suggest this is now changing.
The demand “depends on how friction-free as well as compelling and relevant the distributor of insurance is able to make purchasing of insurance. If travellers are confused with complex T&C hidden behind a wall of forms, the natural awareness and demand may not translate into purchase,” said Ashwin Ramaswamy, the business head of strategic partnerships at Acko General Insurance.
The attachment rate — the proportion of travellers opting for travel insurance — is seeing a 40% increase, even as flight bookings are currently at 30% of the pre-pandemic levels, he added.