Embedded insurance for airlines: The evolution from 'ancillary' to 'protection'

The pandemic has drastically changed the way people travel, and the importance of protection remains ultra-relevant as more borders continue to open. Darcy Shapiro, Chief Operating Officer, Americas, expanded on this increased desire for embedded protection for travelers in a post-pandemic world at the World Aviation Festival. 

Through collecting data from travel partners like Booking Holdings and Skyscanner, we developed a comprehensive understanding of the challenges faced by our partners in the new world of travel. In examining this information we were able to develop products that are uniquely positioned to help our partners better protect their customers. Our case study, Protection and the Pandemic, examines the results of this focus on hyper-relevancy and the subsequent growth in attachment rates across our network of partners, demonstrating that travelers are opting to add protection at a rate 6x higher than at the start of the pandemic.

The fine print of traditional travel insurance has historically excluded pandemic-related coverage, something that travelers needed most the last two years when making claims. Customers who purchased traditional travel insurance were not covered for their out-of-pocket expenses relating to quarantine, failed temperature checks, reschedules and delays, and airline collapse. With this in mind, Cover Genius commissioned Momentive.ai to conduct research across 20 countries in order to understand travel insurance purchasing behavior how these products are offered to travelers and the claims journey. 

The census balanced survey of 15,905 global travelers asked where they last purchased travel insurance and where they would prefer to get it in the future. The results, found in a breakthrough report titled “A consumer-focused survey on claims experience and embedded offers for the travel industry,” showed 43% of travelers intend to switch to an alternative channel from where they last purchased. A majority of respondents wish to get their insurance via their booking agent in the future (growing from 36% to 45%). These figures are hardly surprising given what we know about consumers’ desire for embedded insurance from companies they trust. Travelers are more aware than ever of the need for protection and their primary reason to switch to embedded options are due to convenience (53%) and trust (45%). 

From Darcy’s own experience flying outside of the US for the first time since January 2020, the uncertainties she was concerned about as a traveler was assuaged by clear communication from her booked airline on the requirements to board her flight, including when she needed to undertake COVID testing. Understandably, airlines and booking agents are where travelers want to directly get their information from. Embedding fit-for-purpose protection in the booking path for travelers can drastically change their experience and lead to increased sales by offering both convenience and peace of mind. 

Travel providers need to move quickly to overcome archaic insurance solutions that leave customers denied of pandemic-related claims and average Net Promoter Scores (NPS) ranking in the negatives. Cover Genius’ partners are leading the way when it comes to this shift towards customer centricity. Icelandair became the first national airline to offer COVID protection when they integrated our award-winning XCover distribution platform to launch “COVID Plus” comprehensive medical cover for their customers, ensuring bookings could be made with confidence.  

Ultimately, providing hyper-relevant protection with a customer-centric focus allows for subsequent growth in attach rates by giving customers what they want, in the most convenient way possible. Through the research conducted and the data observed, travelers are selecting travel providers and agents who are able to embed protection in the booking path, giving them peace of mind and addressing their increased concerns in a post-pandemic world.

Key Video Highlights:

  • 0:55 What is embedded insurance? 

    1:11 Cover Genius’ origin story 

    2:04 Origins in the travel industry 

    3:09 Why is it relevant?   

    4:52 Protection and the Pandemic 

    6:28 Gaps in traditional insurance 

    8:01 Global travel insurance survey 

    11:44 How can we help people travel again?  

    12:44 NPS Post-claim 

    14:32 Claims and Happiness 

    15:05 Icelandair and ‘Covid Plus Protection”