RISK
31 July 2019
Travel insurance not a one-size-fits-all solution
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ast year saw around 515 398 South Africans travelling to destinations abroad, and according to StatsSA’s estimates, this year will see even more people venturing outside of the country’s borders. “Most people don’t give too much thought to their travel insurance requirements and simply assume that the standard cover provided by their credit card provider when purchasing their ticket will cover them when things go wrong,” says Christelle Colman, Managing Director of Elite Risk Acceptances. She warns that many things can go wrong while travelling, from minor events to major events such as natural disasters, terror attacks or political instability. “However, some of the most common occurrences that are most likely to ruin a holiday include flights being cancelled, missing flights, lost or stolen passports, lost luggage, illness or injury, and mixups with accommodation. Any one of these events can leave a vacationing family stranded in a foreign country and could cost them tens of thousands of rand.” She adds that every holiday has its own unique risks, depending on the destination and planned activities, so making sure all bases are covered by a policy is essential. “One of the most
WERNER BOSMAN Short-Term Insurance CEO, PPS
devastating things that can happen to a family on holiday after an unforeseen event is finding out their travel policy does not cover their emergency.” Colman shares her travel insurance cover checklist, highlighting some important considerations that should be included in a comprehensive travel insurance policy.
flights are cancelled, it is important to know that their insurance policy will cover the cost of a new ticket, and possibly accommodation during the unexpected extended stay. It is also possible that travellers have to cut their trip short due to an emergency back home or a holiday-ending injury.
Would year-round uninterrupted cover suit some families better? For families who travel frequently, finding a provider that covers the entire family with uninterrupted cover under one policy and that does not require an alert to activate the policy before every trip is a huge benefit.
High-risk activities For those who plan to engage in sporty adrenalin-fuelled activities such as skiing, bungee jumping or paragliding, it’s crucial that they first find out whether their policy covers them in the event of injury. If not, they need to find out whether there is an add-on that they can purchase to cover the extra risk and whether their insurer will assist them with emergency evacuation and repatriation back home if necessary.
Value-added services Added services can make a huge difference following an unforeseen event. An insurance package that offers value-adds such as telephonic medical advice, foreign translation services in a medical emergency and delivery of essential medicine if luggage is lost, should be at the top of travellers’ lists. What to do in an emergency Lastly, and most importantly, travellers need to know what their travel insurer expects from them in an emergency. While thinking about calling a contact centre is often the furthest thing from one’s mind when an emergency occurs, knowing what is expected is crucial – or travellers may just find their insurer refusing to reimburse them for emergency expenses paid.
Business and leisure travel It often happens that travellers combine business with pleasure, tagging a holiday on to the end of a business trip. In cases such as these, there are travel insurers that offer both business and leisure travel cover under one policy, ensuring seamless uninterrupted cover.
Christelle Colman, Managing Director, Elite Risk Acceptances
Cover for the elderly With the number of senior tourists increasing each year, it’s important to know whether age is being taken into account. Where many travel policies have an age limit of 65, there are specialised policies that provide cover for travellers who are well into their seventies and beyond. Trip cancellation or curtailment If holiday makers are stranded in a foreign country because their
What is the future of car insurance?
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he global insurance industry was valued at $4.73tn in 2016 and it is one of the biggest markets in the world, with an estimated growth rate of 3% per year. With the Fourth Industrial Revolution upon us, the automotive industry is set to evolve faster than ever and many insurers are worried about what the arrival of these technological changes actually mean for the market. The industry is seeing the emergence of carsharing, which allows users to rent any car closest to them for a short period of time using an app. We are also seeing commuters choosing between leasing versus car buying, as well as autonomous driving. It is vital that insurance companies prepare themselves for this change. These trends are already bringing about change in the short-term insurance landscape. For example, insurance companies have relied on various factors such as mileage, age and residential area to determine the insurance premium. However, with commuters now choosing to not own cars but rather car-share, insurance companies need to find ways to still insure drivers – using new methods. It will no longer make sense to pay a basic insurance premium every month. The risks posed by not being flexible enough in
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one’s offering will result in many insurers losing business to more agile insurers with pay-per-use products suited to the new market. A study by Deloitte conducted in 2016 suggests that the total annual premiums would decrease by 30% in the year 2040. Also in 2016, ABI Research conducted a study that indicates that 400 million people globally will rely on robotic car-sharing by 2030. With all this change, what does it mean for insurance companies? The car insurance industry will have to think about the following and how this will impact the driver that they will insure: • multiple drivers for the same vehicle (who may not be in the same household) • increased wear with more frequent use as a result of car-sharing • cybersecurity (hacking of autonomous vehicles) • satellite failure and vehicle sensor damage • data-driven solutions. However, all this change doesn’t mean bad news for insurers. With the technological advances, underwriting and claims processes will be streamlined, for the benefit of the insurers, and most insurers will cut out the middleman, which will
ultimately mean lower insurance premiums for end-customers. This also means that insurers will be selling more policies to companies such as fleet operators and fewer to drivers. The growth of self-driving and ride/car-sharing will start to emerge more prominently in the next 10 to 20 years in South Africa, while these are already regularly used in the US and European markets. The ‘pay as you use’ models, such as those used by services like Airbnb and Uber, have required insurance companies in South Africa to think and adapt to these models much faster by being as proactive and forward-thinking as possible. Nevertheless, while there are still a lot of unknowns and many challenges that lie ahead – technological, industrial and legislative – the transition is already well on its way and the phenomenon will accelerate in the coming years. We need to keep our finger on the pulse of these developments to ensure we are well positioned for the future needs of our members.
