Online insurance vs travel agents
Travel agents are under renewed attack over travel insurance, with the publication in the Sydney Morning Herald over the weekend of an article headed: Online versus the travel agent.The article quotes Choice magazine spokesman, Christopher Zinn, as saying “it’s very easy and convenient to go with the insurance provided by the travel agent but that might not be the best deal”. Zinn goes on to advise that “substantial discounts” can be found online. “High agent mark-ups” are often negotiable, he adds. Choice, official magazine of the Australian Consumers’ Association, has long held that travel insurance is far too complex and consumers would benefit if it were simplified.
Travel insurance is one product that has traditionally been viewed by the travel industry as providing a decent and adequate return to agents, while margins are squeezed on practically everything else. The online group Travel Insurance Direct claims its policies cost less through cutting out intermediaries like agents, distributors and marketers.
On its website, the company states: “With Travel Insurance Direct you don’t have to pay significant sales commissions and because we are predominantly online, we pass on the efficiencies that the internet offers. Cutting the cost not the cover.” It also includes an automated engine for giving consumers quotes on holiday travel insurance.
AFTA disputes figures put about by some online sellers. The federation contends that commissions comprise only up to 20 per cent of the typical cost of a policy bought through an agent. It points out that online sellers are themselves in business to make money out of selling insurance.
Written by: Peter Needham
As a former travel agent of over 20 years, who chose to go into selling travel insurance direct to the public in 1999, I would suggest that travel agents are not under renewed attack over selling travel insurance. Since the start of this world wide financial crisis, we have seen a 40% increase in our sales figures and I can assure you we are not alone. We know travel agents have experienced dramatic increase in sales figures, not necessarily huge increase in revenue due to lower air fares etc.
The problem is that with the advent of FSRA compliance, most Travel Agents dropped secondary travel insurers products because they did not wish to have to do 4 more courses per insurer and basically went and compelled travellers to purchase their single offering. This created opportunities for others to compete head to head with travel agents with their own single insurer offerings and cheaper prices.
In my case, as a travel agent in the good old days I offered my clients 4 out of the 10 products around at the time. Why? Well each had slight differences in coverage etc. which allowed them to get the RIGHT policy not be boxed in to what I wanted to sell the.
My sites (which are comparison purchase sites listing product from 4 insurers )continue to offer the opportunity to any and all insurers who wish there product sold on line (currently Aussietravelcover, CHI, SureSave and Toursafe from QBE). We only make money on sales, and while we may not have flashy premises, our costs in state of the art websites and continuous improvements to simplify purchasing travel insurance balance out in the long run.
We have listened to people like Choice in relation to other industries and our sites have been developed since 1999 to try and remove the complexity for the travelling public. We continue to improve the sites and presentation all the time, and we continue to show comparitive products from 4 insurers we sell unlike the plethora of single insurer sites on the market.
We do not get involved in huge advertising campaigns direct to the public in a battle with Travel Agents, we concentrate on the internet and people find US. We have now developed many niche travel insurance websites to reach disaffected and groops wjo feel marginalised like seniors. (www.travelinsuranceforseniors.com.au)
Perhaps Travel Agents need to look at the products they are selling and start rebelling against some of the ‘deals’ their buying groups have saddled them with. Remember the CLIENTS buy the products, NOT your buying groups.
[...] Walter says: March 4, 2010 at 11:19 am [...]
ONLINE TRAVEL INSURANCE – WOT A LOAD OF CODSWALLOP
“With Travel Insurance Direct you don’t have to pay significant sales commissions and because we are predominantly online, we pass on the efficiencies that the internet offers. Cutting the cost not the cover.” It also includes an automated engine for giving consumers quotes on holiday travel insurance.
Why only yesterday we had clients from UK travelling around the world, and on their home run back to UK driving around the
South West of Western Australia.
They had booked QF and QFH through their agent in UK BUT did their own travel insurance on the internet.
Our client’s father had just passed away in UK. Being travellers they came in to see if we could help them get home in time
for the funeral. We of course pointed them in direction of their travel insurance company and not having access to phones
etc they asked if our office could assist them. Of course we did and when we rang the Internet insurance Company concerned
were told that even though there is a death in the family and funeral is imminent the insurance company would take one week
BEFORE they would be able to assist them. All that was needed was to phone qantas airlines and qantas holidays and they
again stated that it would be one week before assistance could be given. So we did – and phoned Qantas and got flights
changed for 90 pound per flight with a AUD$80 service fee from the airline and FOC change from qantas holidays.
Internet cutting costs not the cover BUT WHAT ABOUT THE SERVICE LEVEL?? clients were in tears when they
came in with the stress and tears when they left in sheer gratitude we took care of them…
The reason for the tale is the sheer lack of assistance from the ‘Internet’ Travel Insurance clients bought and it was underwritten by AXA. Absolutely NO SERVICE.
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