As the travel industry still reels from an unprecedented pandemic-triggered slump, with operating income reportedly down 90 per cent across last year, nib Travel chief Anna Gladman believes the sector will need to hold out for another “two to four years” before travel returns to pre-Covid levels.
Speaking at FST’s Future of Insurance conference on Tuesday, Gladman said the wider travel sector recorded a 70 to 75 per cent drop in demand for services in 2020 – levels not seen since the early 1990s.
However, she did hint at some more immediate hope on the horizon for the struggling tourism sector, noting rising demand in the domestic market for “local experiences”, potentially offsetting some of the losses from the drop off in international travel.
“Our survey said that 75 per cent of travellers plan to travel domestically,” doubling, she said, the number recorded on previous nib surveys.
While historically drawing little revenue from domestic travellers, Gladman noted – perhaps owing to continued concerns over Covid and a growing sense of unease around travel more generally – that at least 80 per cent of travellers now plan on buying travel insurance for domestic trips, “an area that travellers have traditionally not looked at,” she said.
“The biggest driver of [domestic tourism] is people really needing to take a holiday. But at the same time, we’re seeing really strong demand for local experiences, [as well as] support for local businesses.”
This, Gladman said, demands travel insurers pivot their resources to delivering the products “to support our travellers” seeking “experiences locally”.
Alongside the surge in domestic travel, Gladman also noted a growing trend towards “travel flexibility and an increase in last-minute bookings”. Today, flight booking across APAC are made on average 17 days later than pre-pandemic, she said.
“We see that travel providers and travel insurers are going to need to adapt their processes to enable that flex up and flex down as borders open and borders shut, and support our customers with seamless experiences through a more dynamic environment.”
Concerns over the health crisis will augur a “pivot to safety and service” Gladman added, with greater demand from customers for information and advice from travel insurers.
“Travellers are going to demand more information about how to stay safe and then demand more from the travel providers and travel insurers in a service provision than ever before.”
Traffic to nib’s safety-related online content is “up 120 per cent to 180 per cent year-on-year”, she said, much of which appears to be related to Covid prevention measures.
“The top three safety measures that travellers are asking about are service cleaning, air filtration and mandatory masks on board airlines.”
According to Gladman, 61 per cent of travel insurance leaders indicated that their top priority within this ‘new normal’ operating environment is to provide “high-quality travel services and experiences”.
“As a travel insurance provider, we need to be supporting those partners and supporting our travellers with the right level of service and safety information to enable customers to feel much safer and more empowered on their trips in future.”
Riding out Covid
Gladman stressed that nib Travel was fortunate to be part of the wider nib group, allowing the business’s dedicated travel insurance arm to adapt and ride out 2020’s Covid downtown – a luxury many independent brands may not have had.
“With our processes, we really had to adapt them; adaptability was key, making sure that we’re able to [maintain] business continuity as we saw changes to what was being asked from travellers, as we saw our sales drop to almost nothing, and the need to actually stop selling in a number of different regions.”
As uncertainty gripped the travel sector, Gladman said nib put significant effort into ensuring clear and efficient communication with customers and partners during the early stages of the pandemic.
“We really needed to lift the impact of our communications. When Wuhan was locked down, we issued an email to all our customers travelling in China the next day – and it had a very high open rate.”
“But we had to make sure that our communications process was far more adaptable. And we could turn those communications around very, very quickly because the environment was changing rapidly.
“We had to support our travel queries. We had to support our partner queries.”
“We’ve got an extensive partner network and we also had a lot of communications that we needed to do with our own staff around what they needed to tell to people, about how they needed to communicate, and what some of those key messages were.”
However, sustained border lockdowns and international travel restrictions will challenge the business considerably.
“What we need is demand to return for us to get back to the ‘new normal’,” Gladman said.
“And we’re working very hard to make sure we’re well positioned when that happens. For us, through that period of time, there are a number of things that we need to basically be ready for.”
Among these has been an aggressive push to digitisation – “making sure that we are able to service our customers in a true omnichannel environment.”
“Some of our customers will still want to talk to us depending on the situation they’re in. But we also need to make sure that we have the digital experiences for our customers end-to-end, so that, as we grow, we can enable that growth and enable our customers to talk with us in the way that they want to.”
With revenue nosediving, prioritisation of business goals has been critical during this crisis period, sometimes sacrificing wish list innovations to ensure more immediate, on-the-ground service demands were being met, Gladman said.
“We’ve had to make some calls that haven’t been ideal, but we’ve prioritised what’s absolutely critical from ‘what would be nice to do’ to make sure that we emerge stronger than ever from this.
“We’ve spent a lot of time trying to create a greater amount of certainty through these uncertain times… and really spent a lot of time focusing on enhancing our culture of adaptability, resilience, and anticipating change.”
Demand for travel flying high in 2021
Demand for travel insurance next year is expected to surge to unprecedented levels, according to Gladman, citing nib’s most recent consumer survey, with 49 per cent of travellers set to purchase travel insurance “more frequently in 2021”.
“This is the biggest increase we’ve ever seen in the history of this survey,” she said.
The industry could also see a rush of new customers – particularly those once resistant to purchasing travel insurance – should countries institute mandated travel insurance in order to cross their borders.
Due to surging demand, nib is also building coronavirus cover into its travel policies, with Gladman noting that such cover is ultimately “similar to if [a claimant] has an injury, breaks a leg, or develops an illness. They would expect cover for that”.
While questions remain around the rollout timeline for the Covid-19 vaccine, for Gladman, the jab should not have a material impact on nib’s policies.
“[The vaccine] is not something that we feel we really wanted to have a view on,” she said.
“What we do think, though, is that the vaccine is going to play a huge part in people’s certainty and willingness to travel. And so, for us, it’s making sure they’ve got the right products to give them certainty.”
“We feel that if, as a travel insurer, we can give greater confidence to our travellers, they’re also more likely to travel on their trips. That’s been the real focus for us over the over the past six months.”