Can Disbursements Help Ease Travel Disruption Pain?

With summer in full swing, millions of Americans are taking vacations they hope will be relaxing breaks from their daily routines or memorable adventures (or both). In fact, recent studies show travel rates are on pace to be higher than usual this year.

According to a report released by AAA prior to the July 4 holiday, 44.2 million Americans were anticipating travel for the Fourth of July weekend alone, a 2.9 percent increase from last year. The same AAA report found 3.44 million people were planning to fly over the holiday, a 4.6 percent increase in air travel from last year’s AAA-reported figures.

These numbers echo similar findings from the U.S. Department of Transportation, which noted U.S. airlines transported 823 million passengers last year, a new record for the industry.

But not all vacations turn out to be gems, and some lose their luster before they even begin. Unfortunately, no matter how much planning goes into a trip, sometimes unexpected circumstances — like lost or stolen luggage, or severe inclement weather — can ruin the best-laid vacation plans. That’s why some travelers purchase travel insurance — as a fallback against unforeseen developments that can ruin a vacation.

An increase in travelers helped the travel insurance market grow to $3 billion last year, according to a recent report. But the travel expense claim process can be just as infuriating as filing a claim for any other type of insurance. Once the claim is processed, policyholders must wait several days for a check to arrive in the mail. For inconvenienced travelers, that means not having access to their claim money until they arrive home. The waiting itself can break the mood of even the most meticulously planned trip.

Travel insurance provider Allianz Global Assistance recently launched a new service to ease the potential frustrations involved in processing travel insurance claims. The service allows users to file claims through the company’s mobile app, and enables funds to be deposited directly into a traveler’s bank account or sent to a debit card. PYMNTS recently spoke with Joe Mason, Allianz Global Assistance’s chief marketing officer, about how the company’s newest payment solution is bringing innovation to the travel insurance market.

Preparing Travelers for the Unexpected

When unexpected circumstances throw a wrench into vacation plans, travel insurance policyholders can file a claim to get compensated for their inconvenience. But even if a claim is filed right away, consumers must typically wait until a check arrives in the mailbox before they can use the funds.

To help inconvenienced travelers get faster access to the funds they need, Allianz recently partnered with Mastercard to allow travel insurance claims to be disbursed directly — to a bank account or a debit card — using Mastercard Send. The company also launched new claim forms and is allowing customers to file claims online or through a mobile app.

Once the claim is filed, Mason said the reimbursement process can take between two hours and two days, considerably faster than waiting up to 10 days for a paper check to arrive via snail mail.

Since the service debuted, Mason said, roughly half of Allianz’s subscribers have opted for electronic reimbursement over a physical paper check. He also said the new claims options provide additional conveniences for both consumers and the company.

“The consumer gets timeliness more than anything,” Mason said. “It’s not just the time it takes to receive the payment. It’s also the corresponding hassle with having to cash a check, as opposed to having money directly deposited into an account, which is both more convenient and quicker.”

In addition to helping customers get faster access to their claim funds, Mason noted that the push payment option also offers Allianz a simpler method for processing payments.

“It’s more efficient from our standpoint just in terms of payment processing,” Mason said. “It’s also less expensive to send payments electronically than it is via a hard-copy check. There are no postage [or] printing costs, and things are more streamlined and more efficient.”

Growing Concerns Give Rise to Greater Travel Insurance Demand

Mason pointed out several reasons why travelers might consider investing in travel insurance.

First, there are minor problems like lost luggage. According to the most recent statistics from the U.S. Department of Transportation, 1.92 million airline passengers (or 3.24 reports for every 1,000 passengers) experienced some type of “mishandled” luggage in 2015. For the thousands of passengers who experience lost or stolen luggage, this inconvenient and disconcerting development means they must replace essential items like clothing and toiletries while on vacation.

In addition to the headache of lost luggage, there are more serious circumstances that can derail a vacation. These fall under the category of “trip interruption.” Trip interruption coverage exists to reimburse travelers for pre-paid trip costs when travelers are forced to shorten or cancel their travel plans.

“They could return home because of a crisis,” Mason said. “They could return home because of a terrorist event, [or] because they were asked to come back to work earlier than they anticipated. All of these sorts of events fall under trip interruption.”

Uncertain global events have become a growing concern among travelers, according to recent data from travel insurance review and comparison company SquareMouth. In late 2016, the company reported an 18 percent increase in the number of insured travelers searching for terrorism coverage, severe weather coverage and greater flexibility to cancel travel plans for reasons typically not covered by travel insurance.

For these travelers, Mason said, getting quick access to funds is important so they can pay for an unexpected, early trip home. In these cases especially, having funds sent directly to a debit card or bank account will be valued higher than waiting for a paper check to arrive in the mail.

‘Moments that Matter’ More than Others?

While Allianz’s latest innovations are geared specifically toward travel insurance, Mason said he sees opportunity for other types of insurance to adopt similar payment options.

“We’re not doing anything that should be unique to travel insurance,” Mason said. “There is no reason why auto insurers, home insurers or boat insurers shouldn’t be able to reimburse their customers more quickly and efficiently through a couple of the ways we’re doing it.”

Overall, Mason said he is encouraged by what other insurers are undertaking to improve customer satisfaction, including reviews of the end-to-end experience, how products and services are offered and how they are delivered. This type of attention helps companies to pinpoint the “moments that matter” most to customers, he said. These “moments” cover customers’ various points of interaction with a company’s interface to get the product or service they need.

“The ease in which claims can be filed and the ease in which you can get reimbursed or payments are generated … those are incredibly important moments that matter,” Mason said.

Insurers working to simplify the insurance process by developing clearer policy language — and offering new payments tools like push payment for claims — are helping to better deliver these moments to customers, he explained. According to Mason, this type of investment is a “win-win” for both parties.

“It’s better for the insurer because it’s efficient and more appealing,” he said. “And it’s certainly better for the customers, because they get their funds more quickly and can use those funds for other things.”

Beyond insurance providers, Mason said, retail businesses are recognizing the importance of delivering customers the service they want, promptly and conveniently. He pointed to notable players in the tech space that are “raising the bar” for how to deliver on customer expectations.

“We look at some of the stalwarts in the innovation and technology space [like] Google, Apple [and] Amazon,” he said. “All of these companies are doing really, really important things to condition customers to expect more from the companies with which they transact.”

Mason praised Google for the company’s work in curating content related to customers’ travel plans, and airline companies for their efforts to improve mobile app experiences to give customers real-time updates about flight status and other relevant information. Developments like these, Mason said, are raising consumer expectations in travel experiences which, in turn, are pushing businesses to deliver greater efficiencies.

“There’s a universal desire to use technology in ways that make the experience more enjoyable, more fulfilling and more engaging for the customer base,” he said.

As millions of travelers hit the road or the sky for their vacations this year, there will no doubt be an unlucky few whose plans unexpectedly veer off course. But as disbursement tools become more widely available in insurance and other industries, the pain of a disrupted trip can be kept to a minimum.

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The PYMNTS.com Disbursements Tracker, powered by Ingo Money, is your go-to resource for staying up to date on a month-by-month basis on the trends and changes in the digital disbursement space.