Before retired Canadian “Snowbirds” fly south for the winter months, they seek the help of brokers or advisors with specialized expertise in travel insurance. In an interview with The Insurance and Investment Journal, Emmanuel Reinaud, Vice President of marketing at etfs noted that these sales are often made by advisors who specialize in the area. There are several reasons for this.
First of all, Snowbirds are aware that they need to obtain coverage before leaving on vacation. Since travel insurance is a complex product, they conduct research on the Internet, but do not buy online. They prefer to trust in the advice of competent advisors.
Secondly, few Snowbirds buy their insurance from travel agencies on the web. “That is more of interest to younger people,” says Mr. Reinaud.
Robin Ingle, President of Ingle International, also notes that these travellers are no longer looking to meet with travel agents.
Third, insurers do not make it easy, since their questionnaires appear complex. What’s more, they are not standardized and therefore differ from one insurer to another.
According to Mr. Reinaud, the industry will soon be forced to reconsider the structure and format of its questionnaires, as well as the risks that are listed on them.
For the moment, given the difficulties faced by clients, advisors are well positioned to step in. When they are looking for a product, they survey the prices at all the insurers before making a recommendation. As a result, Mr. Reinaud says that the lack of standardization gives them significant advantages.
It is in the advisors’ best interest to look after their clients since, in travel insurance and elsewhere, a happy customer is worth several more. “Word of mouth works well,” says Patrick Lavoie, Vice President of marketing at Securiglobe.
Snowbirds can also turn to consumer associations or senior citizen organizations, some of which offer travel insurance and plenty of advice. It is a service that benefits both clients and the industry. However, considering the rate at which the population is aging, there remains a need for simplification in these insurance policies. “Canadians are living longer, particularly women,” notes Mr. Ingle. As a result, there is an increasing number of retirees who are likely to become Snowbirds.
Some of them buy their travel insurance at the end of the summer. The Snowbirds who shop early can sometimes take advantage of lower rates. “Most sales are made between September 15 and November 15. However, they remain steady for the rest of the year,” comments Jean Hervieux, Vice President of sales and marketing at Tour+Med Travel Insurance.
Destination a factor
Whether or not Snowbirds use an advisor, the premium will vary depending on the choice of destination.
Joanne Parent, Regional Director of business development for Quebec at TIC has noticed two new trends. Snowbirds seem to be particularly fond of the Dominican Republic and Costa Rica, she says.
According to Mr. Lavoie, Quebecois Snowbirds are also still very taken with the United States. “They have a weakness for the south-east of Florida, Hollywood, Palm-Beach and Texas, but they also like Mexico,” he says.
At etfs, the experience is not the same. According to Mr. Reinaud, there are fewer Snowbirds who are taking off to the United States. “Today, many of them are heading to Europe, especially France,” he says.
Premiums, which change annually, vary according to the destination. “The average premium for Mexico is very expensive,” says Mr. Ingle. In general, premiums for a stay in the United States are higher than those for a visit to Europe. They have increased substantially because of inflation in American hospital costs.
Mr. Reinaud has observed the same thing. “Inflation [in hospital costs] is around 8% a year,” he says. “If you are in good physical condition, you will have to pay about $334 to cover a 90 day trip. However, that can vary from one insurer to another,” adds Mr. Lavoie.
Length of stay
The premium also depends on the length of stay, which appears to have decreased. “Snowbirds are making shorter trips,” says Mr. Reinaud. That lowers premiums, since risk increases exponentially with the amount of time spent abroad.
Other factors determine the amount of premium, and these vary depending on the client’s health. No matter what your age, it is difficult to obtain insurance when you have a medical history. Mr. Ingle also points out that some products have exclusions or limitations.
An insurer may extend coverage to you if you have not changed medication, been hospitalized, or been treated by a doctor. But Mr. Ingle notes that simply seeing the doctor for a consultation could be considered a treatment. “The insurance could be invalidated,” he says. It may be difficult to understand the phrasing used by the insurer, even for advisors.
While a doctor may consider a client’s condition to be stable, an insurance company may not. There is the same type of problem with claims, since definitions change from one year to the next.
As a result, something that is allowed as a claim one year could denied in the next year by the same insurance company. There is no single solution for Snowbirds. “Customers need to ask questions and take notes,” says Mr. Ingle.
Another difficulty is obtaining insurance for those who are over eighty with existing medical conditions. “It’s always a problem for clients, for brokers and insurance agents. There are fewer and fewer companies who offer this kind of coverage,” comments Mr. Ingle. If an insurer does take the risk, the premiums will be very high.
Mr. Reinaud notes that, generally speaking, travel insurance for Snowbirds is becoming more and more expensive. “As for the sales process, it can be long since Snowbirds take the time to shop. On the other hand, the product sells to young people in a few minutes.”
Most Snowbirds opt for a base policy that includes health care and hospitalization. “Most of them do not buy trip cancellation or interruption coverage. They do not buy anything extra,” adds Mr. Reinaud.
Mr. Lavoie points out that insurers have conducted surveys that have allowed them to refine their product offering. “They have worked on the clauses that meet the needs of Snowbirds who leave for a long stay,” he says.
Some types of coverage, such as an emergency return option, are popular. “You can use it if someone close to you dies, or if there is a catastrophe at home. The trip is paid from the destination to the city of departure,” explains Mr. Lavoie.
There is also coverage that allows the insured to return home for 15 days or less without terminating the travel insurance policy. “This is practical if, for example, you want to come back to see family for the holidays,” he says. There is also a pharmaceutical card that will pay for drugs. “Only a few dollars are debited from the card,” he says.
Even if it is a complex product, travel insurance for Snowbirds still has some good days ahead of it. Being a snowbird is a lifestyle choice. “It is the last thing people will cut back on,” says Mr. Lavoie.
While revenue from covering some retirees has declined, the Canadian market seems to have been less affected by the recession than the United States, according to Mr. Ingle. As for Mr. Lavoie, he has even noticed a few encouraging numbers. “At the beginning of this season, there may have been an increase in travel insurance sales over last year.”