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Business travel, the largest segment of the travel market, has been the slowest to recover from the disruption caused by the pandemic.
Also, as business people return to the airline industry, the insurance products that cover them are changing.
In the US, travel costs plummeted by 71% from 2019 to 2020. That’s a gap of nearly $100 billion, according to management consultancy McKinsey & Co. The average decline in air ticket sales over the 52 weeks was 59.2%.
Although there is plenty of room for recovery, corporate travel activity is increasing, albeit slowly, but projections differ.
A Deloitte Touche Tohmatsu study predicts a return to 60% to 80% of 2019 levels by the end of the year, and a report by the U.S. Hotel & Lodging Association in partnership with Accenture predicts business travel will decline further. I’m here. More than 20% from pre-pandemic volumes in 2022.
Recovery timelines are complicated by rising costs, including insurance premiums. According to Xavier Blanchard, the UK-based CEO of Axa Travel Insurance and global head of travel at Axa Partners, travel insurance risks continue to change rapidly. higher premiums for business travel insurance will continue to be a factor. Axa SA.
“The drivers for price increases heading into 2022 are very clear,” Blanchard said in an email. “Most important is the impact of Omicron and its subsequent variants, which are fueling claims of quarantine or cancellation.”
Blanchard said the final weeks of 2021 have been the most critical since the pandemic began, “combining extensive testing, heavy end-of-year travel and record high infection rates.”
“Similar episodes may occur, depending on the potential subspecies and their epidemic profile,” he said.
Dmitry Boyko, assistant vice president of travel and incidents at New York-based Arch Insurance Group, said the impact of the pandemic on the insurance industry is driving up premiums and evolving insurance distribution channels. I was.
Christopher Howard, Philadelphia-based executive vice president and head of market management, accident and health, said the main coverages of a typical business travel insurance policy are “travel, accidental death and emergency medical care.” It says it is a “traditional and cost-oriented compensation” for Zurich in North America.
During the current pandemic, coverage for quarantine stays and COVID-19-related medical expenses is included in the emergency medical component of travel insurance, Howard said.
According to Howard, there are voluntary “cancel for any reason” perks, but travel insurers stopped offering them early in the pandemic.
“After the pandemic, I think many companies are rethinking their ‘cancel for any reason’ policy,” Boyko said. “They understand that the risks are very concentrated.”
The surge in travel insurance purchases during the pandemic has increased the profile of coverage as travelers have become concerned about the costs associated with being infected with COVID-19.
“People are becoming more aware of the need for travel insurance and increasing product awareness,” said Boyko. “But they know how to use the policy better,” contributing to an increase in complaints.
Boyko said coverage, including medical and medical evacuation, should be a top priority in business travel insurance for companies revamping their travel plans this year.
“If you travel abroad and catch COVID and have to stay in the country for many days, without that travel insurance, the cost will be tens of thousands of dollars out of pocket,” he said.
A second priority should be the positive benefits of travel delays, he added.
Rising medical costs abroad are also a major driver of premiums, Blanchard said.
The coronavirus is straining healthcare infrastructure overseas, driving up costs, Blanchard said. This trend may not be reversing anytime soon, meaning companies “will be key to their ability to implement effective cost containment measures.”
An ITM study found that the biggest challenge corporate travel buyers will face in managing travel in 2022 is “the complexity of border restrictions, quarantines and inspection protocols.” .
And 88% say it will be the biggest factor negatively impacting their confidence in their level of business travel next year.
In this regard, companies need to adjust their risk management protocols to better consider the “health and hygiene risks” of all travel destinations, Blanchard said.
“A lot of companies are now doing country risk assessments based primarily on crime and terrorism levels,” he said. “It’s also important to consider a health risk score, perhaps a second score based on safety that takes into account the level of health care in a country or region, and a health risk score, not only during security, but also in the event of a health problem. The ability to evacuate employees to an incident.”
Concerns about climate impacts
a According to researchers, a factor increasingly influencing corporate travel decisions is their commitment to sustainability.
“Impact on sustainable practices” was the second biggest challenge buyers said they would face in managing travel in 2022, according to a study by the Institute of Travel Management.
Emily Weiss, Accenture’s New York-based head of global travel, said in a presentation at the Business Travel Forum in November: “Employees will travel farther or for longer periods of time.
A 2021 survey by Deloitte Touche Tohmatsu reports that 79% of companies have committed or are working towards reducing their carbon emissions. About half of survey respondents plan to optimize their travel policies to reduce their environmental impact over the next year.
Our commitment to sustainability also has the added benefit of significantly reducing costs. Deloitte researchers note hundreds of millions of dollars in costs gone during the pandemic. According to the survey, 70% of his companies plan to “reduce the frequency of business travel to enhance revenue”.
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