Efforts by travel insurers to reduce costs are proving counterproductive and are ultimately increasing expenses – that’s the word from one international travel assistance provider.
A common theme in the industry is that travel insurance companies are trying to move toward an in-house assistance model as a means of reducing costs, Jonathan Bancroft, head of security at Traveller Assist and former officer in the British Army, told Insurance Business.
“I understand that the margins are slim in travel insurance, and that there is a need to reduce costs, but at what cost?” Bancroft commented. “Medical networks take years to build. An insurance company based in the UK, Australia or New Zealand can’t possibly become specialists in the whole world overnight. So many factors come into effect, from understanding the local laws and cultures in each country your travellers are visiting, to knowing the geographical layout of a country, including routes, elevations and weather patterns. Even knowing the dates of public holidays is a factor to consider.”
In some regions, such as Latin America, the quality and cost of healthcare differs substantially from hospital to hospital, city to city, and country to country, the executive explained.
“Knowing where, when and why to transfer a patient can save tens of thousands of dollars, and literally mean the difference between life and death,” he said.
Having knowledge of a number of what he admits are “more extreme” cases, Bancroft warned that he fears the trend could be on a downward spiral.
“Unfortunately, from my experience so far, picking up the pieces of cases that have gone wrong, costly and timely mistakes are being made. These mistakes are affecting the quality of care a patient receives, and, ironically, increasing the overall costs to travel insurance companies, which is exactly what they are trying to avoid,” he commented.
Ultimately, the impact of moving to a model which reduces the level of expertise has an adverse effect on both policyholders and insurers themselves.
“Travel insurance companies who choose to move their assistance model completely in-house, without hiring qualified, medically trained, and experienced staff – and who don’t use local assistance companies with intimate knowledge of their regions – are inevitably going to increase their overall costs, by trying to reduce costs, losing loyal customers in the process,” Bancroft concluded.
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