How important is travel insurance in choosing a destination? More and more travellers consider it essential to include a travel insurance that protects them in case of unforeseen events. Let’s see why.
The growing trend of travel insurance
The entire hospitality sector has undergone a profound upheaval in the last years, caused by the pandemic and other geopolitical events. Similarly, the habits and choices of travellers have also changed radically.
Travel insurance has inevitably felt the effects of this change. In fact, while previously it was mostly used by those accustomed insurers, in the last 2 years, they have experienced a real boom in requests with a trend that will further increase in the future.
The increase in travel policies taken out and the search for guarantees
This increase in demand for travel insurance is supported by numbers showing an 82% growth from the second half of 2020 onwards [1]. Moreover, 60% of failed hotel bookings were caused by the fear of travelling due to the pandemic and the lack of guarantees in case of cancellation. This means that an accommodation offering a rate with insurance has a better chance of attracting bookings compared to those who do not offer this option.
Estimates predict a constant increase in travel insurance in the coming years. The global insurance market, which was worth $21.5 billion in 2020, according to projections, could reach $33.7 billion by 2027, with an annual growth rate of 6.7% between 2020 and 2027[2].
Booking trends among millennials before and after the pandemic
The most surprising data on travel insurance concerns the new trends of young millennials, who have radically changed their travel habits. Indeed, before COVID-19, they were accustomed to booking “lightly,” rarely considering the need to consider insurance to protect themselves from unforeseen events. Now, however, they show an increasingly growing interest in travel insurance, and there has already been a 15% increase in requests in 2021.
This change in travellers’ habits, which has also affected the younger generation, is an important crossroads for the tourism industry that will also involve future generations.
Why add insurance to your stay?
We have mentioned how the demand for insurance protection has increased, but we have not yet explored the reasons for this phenomenon. To attribute the sole cause to the pandemic, wars and the collateral fear they have generated would be limiting. However, the significant boost it has provided must be recognised, broadening the need for guaranteed bookings and safe stays to a wider audience of travellers.
In fact, the fear of an unforeseen event not only discourages travel but also discourages the thought of going on a trip. Especially for leisure stays, where “holiday” should be synonymous with “relaxation,” the state of mind when choosing the desired destination is certainly not linked to fear. The need to associate insurance with one’s booking, therefore, arises from the tranquillity and guarantee that, in the event of an unforeseen event (such as an injury, an accident, or an illness), one is protected and covered financially. If the years of COVID-19 and wars have taught us anything, it is that, however remote an eventuality may be, there is a chance that it may happen, and therefore, we can protect ourselves as a precaution.
And how to choose the right insurance?
With the increase in requests for travel policies during booking, insurance products in this sector have proliferated. Products proposed both by the most important brands in the insurance field and by intermediaries who, born precisely in recent years, come between the customer of the accommodation and the insurance company.
Each hotel has adopted (those who have not yet done so will do so soon) a solution to offer its guests to meet their needs. But which solution to choose among the various proposals?
The main covers
Firstly, it is necessary to evaluate the coverage included in the policy. These protections generally fall into two phases: before the stay, in case of cancellation of the reservation, and during the stay.
The cases for which reimbursement can be obtained in case of cancellation are usually related to health (injury or illness, including COVID-19) and to the professional sphere (cancellation of leave, dismissal, or new hiring). During the stay, on the other hand, you can be reimbursed for expenses incurred in the event of injury and illness but also protected for theft or loss of luggage and in the event of a road accident.
Types of policies for hotels: classic or inclusive
As we have said, regarding coverage, there are many common points among the various insurance products (although there are substantial differences between terms and conditions such as deductibles, deductibles, and maximums). There are instead two well-defined ways to take out travel insurance:
Classic. It can be purchased as a supplement in addition to the reservation, either simultaneously with it or at a later time. In this case, the policy will have a fixed cost (per room or based on the number of people) or a percentage of the chosen room rate.
Inclusive. This is a real tariff plan, selectable among the various options offered by the accommodation facility on its official website, which includes insurance within the room rate. With this method, therefore, there are no additional costs to bear, and the insurance is taken out at the same time as the reservation.
[1] Source: Google Research
[2] Source: Allianz Partners
