Allianz Global Assistance has seen huge growth in annual travel insurance policy sales in 2018. Year over year, sales are up 48% across the entire company, and in the travel agency channel, sales of annual policies are up 67%. Senior editor Jamie Biesiada spoke with Richard Aquino, Allianz's vice president of sales and manager of the agency channel, about why annual policy sales are so strong this year.
Q: You're seeing an increase in the number of annual policies that are being sold by travel agents?
A: Yes, we are. We're seeing an overall huge uptick in our sales across the channel. But what's surprising is, in the past, our annual policies have always been very slow-growing [with agents] -- like 3% or 4%, compared to the growth that they're seeing today, which is exploding.
Q: When did that growth start?
A: It started at the end of last year.
Q: Why are sales in the agency channel in general, not just with annual policies, so strong right now?
A: It's really redefining travel insurance, we're just putting more focus on the customer journey, so it becomes easier for our traveling partners to sell our product. That's not one thing. It's the ease of technology, it's having a cutting-edge app, and then it's providing unmatched marketing in the marketplace.
If you look at travel insurance and the marketing materials from years ago in the industry, it's kind of uneventful or unmotivating or just not that sexy.
But I think it is because of all those things. Also, the industry itself is growing; our partners are growing, so we're growing. And we're bringing on more partners than ever before because of the marketing, the technology and the products that we're putting in the marketplace.
Q: Why are agency sales of annual policies in particular growing?
A: I think that what we're seeing is our partners positioning this product for people who are taking more than one trip. There are benefits to annual [policies], and there are benefits to a single-trip purchase, but I think as we're seeing more people travel and more people travel more frequently, we're seeing that the value of the annual product has more interest to our partners and to their travelers.
Q: Why do you think consumers are becoming more attracted to annual policies?
A: One, people are taking more trips. We're still seeing a strong growth for people going on a river cruise, for example, for that [single-trip insurance product that carries more benefits]. The annual product ... what I think we're seeing is more domestic trips of two or three days and people taking those types of trips where the annual product really makes sense.
Q: What are the upsides and downsides of choosing an annual policy versus a per-trip policy?
A: They are two different products. The fundamentals are still there, and when I say fundamentals, the core benefits are still there. If you think about travel insurance, you think about trip cancellation, trip interruption and medical. That's the foundation that you'll see, the core benefits in all of our product lines.
The annual products really benefit from lower cost for more trips, but you won't see the benefit levels [of a per-trip product]. ... The annual products won't have higher coverage limits in general. Trip cancellation [coverage on an annual plan] ... might be $1,000 to $3,000, so an annual product might not cover that river cruise that costs $3,800.
Q: What kinds of clients should agents target as potential purchasers of annual policies?
A: We're seeing more people come back to the same agent over and over again. I think in doing that and as that retention has grown throughout the years, I think the travel agent and travel adviser know the customer better today than they did five or eight years ago.
Because they're booking multiple trips, I think that becomes an option where the travel agent is really getting to know the buying habits of travelers so they can position a product when a person is traveling two to three times a year -- maybe taking a trip to Cancun for two or three nights, maybe then going to the Keys for two or three nights, maybe doing a Disney trip for three nights.
I think as travel agents become more knowledgeable with their client, then they can position different products that really fit the traveler.