The number of Chinese tourists travelling abroad has increased significantly in recent years, and overseas travel risks have continued to grow. The opportunities to tap into this growing wave of overseas travel among Chinese consumers are apparent, and it is important to analyse the trend and risks to do so. Swiss Re recently conducted consumer interviews and in-depth market research on travel insurance, analysing the risk exposures and business opportunities of overseas travel with the aim of offering reference tools for the market and customers.
Capitalize on the travel coverage gap
The study found that most Chinese tourists travel overseas several times a year. In our previous report, more than half of the visitors surveyed had travelled overseas more than twice in the past year. On average, an individual makes 2.4 overseas trips a year, and most of the overseas travel were primarily in the Asian region, in particular Hong Kong and Japan.
While 75% of tourists purchased travel insurance, more than 62% opted for single trip insurance and only 38% purchased multi-trip insurance. Our results also showed that approximately 59% of first-tier city travellers and 51% of high-income travellers did not choose multi-trip travel insurance. Interestingly, multi-trip travel insurance was most popular among the 18-24 age group, which has relatively lower purchasing power. We found that a lack of awareness and knowledge of multi-trip travel insurance products was the main reason for the lower take-up among travellers who make multiple overseas trips.
Insurers can capitalise on this gap by taking a more proactive approach in offering multi-trip travel insurance options for overseas travels. Providing clearer and more detailed explanations of the products, as well as offering package discounts can help to encourage potential consumers to take up multi-trip travel insurance. In addition, insurers can also promote such products to travellers effectively through scenario-based selling tactics, such as promoting multi-trip insurance products in travel fairs.
Emerging needs from customers
Some of the commonly perceived risks during travel include personal accidents, property loss, flight delays, and overseas medical expenses, which are covered by overseas travel insurance. The ability to identify and add emerging risks to the coverage can enhance the attractiveness of travel insurance products. Participants' responses to the survey indicate that most travellers would like to be provided with rental services for temporary mobile phones in the event that of mobile phone loss during their trips.
Insurers may wish to collaborate with local providers of second-hand mobile phones to help offer this service to policy holders. Another option would be to offer travellers a reimbursement for the rental costs of mobile phones, but one needs to be mindful of potential moral hazard or fraudulent claims in such cases.
Use online channels efficiently to promote products
An analysis of our statistics showed that online travel platforms play a significant role in promoting and incentivising the purchase of insurance products. Using online channels effectively can help encourage take-up of travel insurance products.
Comparing online and offline transactions of insurance products as illustrated above, 59% of travel insurance products are purchased online, with travel websites and insurers' official websites contributing to the bulk of it. This implies that travel insurance is one of the products that consumers are most inclined to purchase online.
At the same time, we found that while WeChat is increasingly important for social interactions, consumers are less receptive to purchasing insurance through this platform. A possible reason is due to the limited use of WeChat for promoting insurance products in the market. This creates an opportunity for insurers to beef up their use of WeChat official public accounts to promote new personal insurance products, intensify their regular interactions with consumers and learn more about their customers’ needs.
In addition, we learned that buyers often face challenges when comparing travel insurance products online. Lengthy insurance clauses and convoluted product descriptions make it challenging for buyers to make clear products comparisons, which can eventually lead to consumers forgoing the purchase. The survey also showed that dissatisfaction with travel policy terms and conditions was more than 50%, largely because they were too long and difficult to understand. Providing shorter, clearer terms and clauses on websites with a single click will enable consumers to compare different products easily and encourage purchase.
Customise solutions through integrating personal data
User receptiveness to providing personal data is generally high as majority (54%) of the respondents indicated their willingness to provide such information in exchange for better services and prices when purchasing insurance. A smaller group of 39% expressed reservations to do so.
Insurers can actively explore opportunities to use personal data in providing value-adding services when developing overseas travel insurance products. The availability of customised products tailored to consumers' travel needs may encourage those who have reservations to change their mind and share more information. Gathering a wider pool of consumer data will also enable insurers to upgrade their overseas travel insurance products and tap on opportunities to cross-market other insurance solutions.
As a risk knowledge company, Swiss Re recognises the value we can bring to insurers and partners through market insights and knowledge. We hope that our findings will provide you with a better understanding of risks related to travel products, consumer purchase considerations, and help you to better design solutions to meet your consumers' needs.