Up, up and away

For thousands of UK holidaymakers looking forward to their first trip abroad in two years, Easter 2022 was a crushing disappointment.

With more than 1,300 scheduled routes cancelled over the four-day bank holiday weekend, airlines and airports struggled to cope with staff shortages as demand spiked by 50-to 75 per cent compared to pre-pandemic to work with distributors to inspire public confidence in travel again – or they were all in the soup. Airlines in particular, which had viewed cross-selling insurance simply as a revenue generator, began to see it as a way to add value to their product and get nervous customers, literally, back on board.

It was into this maelstrom that Paris-based B2B insurtech startup Koala stuck a parametric paw.

Launched in 2018 by Ugo Weyl, Léo Tordjman and Antony Mechin, the Koala

Koala is broadening insurers’ horizons when it comes to travel protection products in a post-pandemic world. We spoke to Co-founder Ugo Weyl

issues, sporadic lockdowns in Asia, and disruption caused by the war in Ukraine. It led some forecasters to extend the date by which they now expect air traffic to

return to pre-pandemic levels, to the second quarter of 2025.

Travel insurers have, similarly, had to deal with a rollercoaster two years. First, they were hit by an avalanche of claims, triggered by a global movement ban, putting analogue processes under extreme pressure. That was quickly followed by a shift in public sentiment around travel insurance, many concluding that the comprehensive policies they’d routinely taken in the past and barely looked at, didn’t stand up to scrutiny in this new and unpredictable travel environment. And, perhaps most importantly, the insurance industry as a whole had to figure out ways

levels. Travellers who’d been alerted in advance to changes to their travel plans could count themselves lucky; others were unexpectedly stranded for hours, watching blank departure boards, spending their holiday cash in overpriced airport lounges and wondering if it was worth all the effort. They no doubt also wondered when and if they’d get their money back.

The chaos was a reputational disaster for an industry still in fragile recovery from COVID-19, now also having to deal with soaring fuel costs, recruitment team had been preparing to release the company’s first product in 2020 – an option for customers to be automatically compensated if their flight is delayed, cancelled or diverted that can be bundled via an API into a travel company’s booking process. True to Koala’s vision for providing travel protection ‘with no exclusions, no proof and compensating travellers as soon a disruption occurs’, it stripped away several layers of complexity to offer an ultimate user experience, which also lowered claims management costs. Its flight disruption and missed connection protection are underpinned by parametric technology.

“When somebody buys a product, we live trace the flights associated with it. We know at any point in time whether that specific customer will get the flight. If they get to the airport and have missed the connection, they will already have a new ticket in their email,” explains Weyl.

Koala is among a new generation of insurtechs which can’t be neatly categorised. Registered as a brokerage, its revenue stream is two-fold: it takes commission as a broker/managing general agent on every insurance policy sold, but, at its core, Koala is a financial solution design company, combining multiple data streams and building machine learning algorithms to create bespoke, paperless products within an automated management process. It puts its ‘techspertise’ at the disposal of others and licences its products and software, working with companies up, down and across the insurance and travel industries. Among its early design and delivery partners were insurance distributor Wakam, which now markets a leading flight disruption product, and Koala’s reinsurer Swiss Re, for which it helped build a dynamic pricing algorithm that leverages machine learning to predict the cost of any flight in the world being cancelled or missed.

But in the spring of 2020, no one was going anywhere and Koala had to think fast on its little feet. “We were lucky because we were small when COVID-19 hit. It was easier for us to adapt,” recalls Weyl.

And what it came up with was a non-insurance protection product called Flex. Sold to businesses from airlines to hotels, ferry companies to campsites, it gives travellers peace of mind that they can cancel their trip in a single click, with no supporting documents or reason required, and get a pre-defined lump sum back in their account instantly.

Probably more accurately described as a change-of-mind guarantee – or warranty, depending on how it’s marketed – Flex isn’t subject to restrictions that apply in some regions around who can sell travel insurance and how. Importantly, it gave airlines offering value-destroying flexi-fares with no cancellation or change fees to encourage bookings, an exit strategy when the market started to recover.

Flex proved to be the sweetener that would open doors for Koala.

“When we were selling it, we had partners saying ‘I’d like to distribute it, but I also need more traditional coverage and I’d prefer not to have two or three providers, so can you source it for me?’,” says Weyl.

So, Koala now also works as an aggregator, offering its products alongside more traditional comprehensive medical and repatriation cover for any traveller, regardless of where they have to get back to in the event of an emergency. It overcomes the problem operators have in finding multiple insurers with licences in different regions to cover every traveller.

In February, French travel search engine Kayak launched a digitised travel protection platform, based on Koala tech, offering Flex alongside its Comprehensive insurance, Kayak’s own studies having revealed that

and assistance products’ as they sought extra reassurance from operators, John-Lee Saez, director of Kayak Europe, saw in Koala ‘a great opportunity to build a new kind of no-nonsense protection’. Kiwi.com, an online travel agency, has gone a step further by incorporating Koala products into a full guarantee that comes with any booking and gives flexibility to customers to change travel arrangements. It’s this full bundling of digital financial services, which can be offered alongside more structured insurance products, which Weyl believes will differentiate operators in the long term and, in the short term, aid the industry’s recovery. “Embedded insurance has been a feature of travel for a while – when you buy a trip, you get offered insurance or you pay with a credit card and insurance comes with it. But bundling other types of financial services has several advantages. When you sell insurance, five-to 25 per cent of people will buy your product; when you start bundling, you go to 100 per cent. Everyone is covered and it decreases the price Bundling of protection per person. these other types of financial This is where the travel industry is going, if operators realise there’s services has great value for the end several advantages. This is where the consumer and it works.” Despite the pent-up demand for travel, about half of French travel industry is 2022 isn’t shaping up to adults were planning to buy travel insurance this year. A quarter, however, going, if operators realise there’s great be a great year for the industry, with ongoing staff shortages causing didn’t trust insurers; value for the operating difficulties around 40 per cent said policies were unclear and misleading, and just under end consumer and it works and soaring costs likely to inflate prices. Axa’s Morazin also a third anticipated getting revealed the company bogged down in any subsequent claims had moved from ‘a price negotiation process. Another report from end-to-end approach to a real mutual understanding travel insurance and protection provider of the risks and the definition of a common Collinson, in April, showed that 39 per strategy’ as it helps operators recover cent of the UK travellers it surveyed were from two years of attrition. Part of that is no longer nervous about travel because recognising what customers really want – of changing COVID-19 guidelines, but the insurer has signed an agreement with 38 per cent still were, and 48 per cent Etihad Airways, for instance, to offer optional were concerned about losing money due products based on a customer’s profile. to COVID-related cancellations. Partnerships with intrepid technology

While insurance giant AXA’s senior VP explorers like Koala are likely to become of global travel, Erick Morazin, recently more common as the industry adapts. And, predicted ‘very strong growth in travel if you’re sitting on your suitcase in Terminal insurance sales’ with a tendency for 4 at Heathrow at the moment, that’s got to travellers to ‘over-consume travel assurance be good news.