The report also highlights the swift rebound of travel in the Asia Pacific (APAC) region, with travel search volume increasing by 50% in Q4 2022 compared to the previous year.
However, the resurgence of air travel has presented significant challenges for airports and airlines. In response to the prolonged decline in travel demand, many of these entities reduced their staffing levels. As a result, they are now struggling to keep pace with the sudden surge in travellers.
Since the summer of 2022, the Embedded Insurance Travel Report says; numerous airports and airlines in Europe have failed to meet the growing demand, leading to poor customer experiences, as well as a rise in flight cancellations and delays.
Flight cancellation rates have risen, says Cover Genius
The issue of flight delays and cancellations has left travelers frustrated and dissatisfied. In Australia, for example, the on-time arrival rate for airlines averaged only 77% for the fiscal year ending in June 2022, while departures fared slightly worse at 76%. Moreover, the cancellation rate throughout the year stood at 8.3%.
These flight disruptions are expected to result in an increased volume of insurance claims, leading to longer wait times and lower Net Promoter Scores (NPS). Historically, the airline industry has struggled with low NPS ratings, with an average score of -1 in 2020, which was 13 points lower than the cross-sector average.
Nevertheless, despite the challenges faced by airlines and decreasing customer satisfaction, the travel industry as a whole is anticipated to return to profitability in 2023. This positive outlook is primarily driven by ongoing efforts to cut losses stemming from the impact of the COVID-19 pandemic on their businesses in 2022.
Insurers can boost traveller confidence
To address the growing frustrations of travelers and boost their confidence, travel providers can offer embedded protection as a solution. According to the Embedded Insurance Travel Report commissioned by Cover Genius and conducted by Momentive.ai, 45% of global travelers prefer to purchase protection directly from their travel provider, agent, or airline.
This insight should encourage travel providers to act as intermediary agents and bridge the protection gap faced by travelers. Offering customers options such as ‘Cancel For Any Reason’ (CFAR) protection can significantly enhance traveler confidence. CFAR protection allows travelers to book their airfare with the assurance of receiving a full refund if they need to cancel their plans for any reason, including illness, public transport disruptions, or extreme weather.
Embedded protection will also improve customer satisfaction
Additionally, travel operators can leverage embedded protection to provide tailored solutions that address these challenges and generate additional ancillary revenue streams. For example, offering simple baggage protection or flight delay options can automatically compensate travelers for any baggage delays or mishaps.
Cover Genius has been at the forefront of co-creating embedded protection solutions with its travel partners, ensuring that travelers are not left unprotected in times of need when traditional insurers are absent. With the current surge in travel demand, it is crucial for travel providers to stay ahead of the curve.
Angus McDonald, CEO and Co-Founder of Cover Genius, said in a recent interview: “Embedded distribution brings protection to the online customer journey and makes it imperative for brands to deliver strong customer experiences.”
He continued: “By partnering with an insurtech, digital companies can create tailored offerings that are personalised, priced right, and delivered conveniently. Our research shows that customers want this protection.”
McDonald went on to say that 70% of global customers are highly interested in receiving embedded protection directly from their bank or financial institution, and this trend carries through other sectors like retail, travel and property.
By integrating embedded protection into the booking process, travel providers eliminate the need for travelers to seek and purchase third-party travel insurance separately, streamlining the customer experience.
CFAR protection provides better servicing
In-demand solutions like CFAR protection not only foster a closer relationship between airlines, travel agents, and travelers but also open up new avenues for ancillary revenue. Moreover, travel providers can minimize payment liabilities by providing refunds in the form of flight credits or miles.
According to the Refund Protection Report, which surveyed over 10,000 global consumers across eight countries, 60% of travellers said they would be highly likely to book airfare when given the option to purchase CFAR protection, as opposed to non-CFAR protection that requires submitting paperwork or documentation. Driven by convenience, these travelers are even willing to pay 133% more for CFAR protection.
McDonaled explained: “At Cover Genius, we work with travel brands to deliver easy-to-understand protection embedded in the purchase journey, along with other customer-centric benefits such as the ability to dynamically bundle and unbundle products, and industry-leading claims experiences with instant payouts in more than 90 currencies.”
He added: “By enhancing their travel insurance offerings, brands can create better customer experiences that drive loyalty and repeat business.”
Recognising that the end-to-end customer experience is as important as the policies themselves, travel providers should proactively facilitate a seamless claims process. Cover Genius’ XCover.com platform offers instant payments of approved claims in over 90 currencies and through various payment methods.
Consequently, the company has achieved an industry-leading NPS of +65, while its award-winning service design has helped partners reduce support tickets by a remarkable seven times.
As the world witnesses the resurgence of global air travel, the travel industry must adapt to the changing landscape by offering tailored protection solutions that meet traveler needs. By doing so, they can build trust, boost customer satisfaction, and unlock new revenue streams, ensuring a brighter future for the travel industry.
