Millennials expect transparent, relevant and personalised services; and while travel experiences have diversified, insurance products have not adapted to this. The real concerns of travellers are often not covered and insurance policies remain long, complex and ambiguous.
By 2020 millennials will surpass Generation X to become the world’s biggest spenders. This group of modern consumers is interested in buying experiences – such as a memorable holiday – rather than products, presenting a huge revenue opportunity for OTAs (online travel agencies).
Yet, these same millennials do not protect themselves against exogenous events that could ruin their travel experience such as a flight delay or cancellation, a missed connection, bad weather, and so on. In fact, two in five (40%) people aged 18-24 and 38% of people aged 25-34 travelled abroad uninsured in the 12 months to May 2017. For OTAs this not only results in unhappy customers, which can damage their brand, but it also means they are losing out on vital ancillary revenues.
So why aren’t milliennials insuring their travel experiences, and what can OTAs do to change their minds and reap the associated rewards?
Why won’t they insure?
Millennials expect transparent, relevant and personalised services; and while travel experiences have diversified, insurance products have not adapted to this. The real concerns of travellers are often not covered and insurance policies remain long, complex and ambiguous.
Often, the claims process is so exhausting that even if travellers buy insurance, they often choose not to waste their time completing the necessary forms to secure compensation. Clearly, traditional insurance products don’t meet the needs of the modern consumer.
Get them to change their mind
Innovative technologies are expediting the creation of personalised insurance products. Such insurance products can be tailored to the individual’s specific needs, taking into account their age, destination, planned activities and the purpose of their trip. For example, if travellers going on a summer vacation know they are protected against the incidence of a rainy day, they are much more likely to buy that insurance. Similarly, business travellers that need to arrive in time for an important meeting are more likely to spend on insurance that offers immediate reallocation onto the next available flight if their original flight is cancelled.
Finally, no traveller wants to spend valuable time claiming back money for insurance they purchased. Instead, leveraging solutions that have the ability to gather data from external sources, OTAs can notify their travellers in real-time when their policy is triggered, delivering them immediate and automatic compensation accordingly.
Offering relevant, reliable and automated insurance products to millennials will not only improve their travel experience, boosting brand reputation and enhancing customer loyalty, but will also deliver important ancillary revenues to travel companies.
Noam Shapira is the co-founder and co-CEO of the InsurTech startup, Setoo, which is disrupting the insurance market by enabling e-businesses to create and sell great protection tailored to the consumers’ needs. Through the Setoo platform businesses can quickly and easily build and integrate simple insurance products that are embedded into the customer journey and with compensation dispensed automatically. By enabling e-businesses to protect its customers against the exogenous events that can ruin their experience - such as missed flight connections, lost parcels and adverse weather conditions; Setoo helps them create new revenue streams and outstanding customer experiences. His background includes 20+ years of experience in market, technology, and product strategies at startups, as well as established businesses. He achieved an MBA through the Kellogg-Recanati International Executive MBA program and he holds a BSc in Computer Science from Tel-Aviv University.
