Why The Travel Industry Needs To Embrace Data-Led Insurance: Interview with Sami Doyle
1. How did you come up with the idea for TMU Management? Was it a direct result of the pandemic?
The pandemic highlighted key flaws in the way the insurance industry services both the travel industry itself and the financial services sectors exposed to the travel sector. Whenever there is a shock event like Covid19 or looking further back, 9/11, the Insurance industry typically removes cover to the majority of the travel industry because of a general perception of negativity towards the sector. It was our view that this suggested there was no active risk management occurring by underwriters, nor did underwriters have the ability to understand their risk portfolio case by case based on actual data. This was frustrating to us as we believe there are solutions to solve this problem and TMU Management was born. It was also frustrating to many travel businesses who clearly were able to weather such storms but could not effectively communicate this to their brokers, who could not communicate their insurance markets.
TMU is the latest business from Trust My Group, who for the last decade has been developing technological solutions to financial protection problems in Travel. We wanted to modernise how risk is managed so that the insurance solutions we provide are available for the good times and the bad.
2. Why does TMU Management serve Acquirers as well as Travel Providers?
The big elephant in the room for this space has been the reliance upon chargebacks as a form of risk mitigation to both ATOL and the insurers servicing travel businesses. In most financial failure insurance or Bond products, Insurers absolve themselves of any claim that could be separately covered via a chargeback claim. This has created a second bottle neck in the industry whereby Acquirers have also pulled out of servicing travel companies. It has also meant there is distrust by acquirers even when travel companies are able to evidence insurance products that claim to cover acquirers.
It was our view that the time was right to provide acquirers directly with insurance to cover the potential costs of chargebacks in the event of merchant insolvency. This removes the need to rely upon a third party policies and effectively service the travel sector again.
3. What makes TMU stand out from other insurance providers?
TMU stands out for two key reasons:
- Technology – we ask our policyholders to integrate to us via API in real time. This means we see live data on the exposure of each travel company, either for their own financial failure policy or for a business such as an acquirer who bears the exposure on the credit card transactions. We are able to understand each business, the trends and where there are areas of concern before an event happens. Importantly, we are able to communicate to our Insurance partners why these companies should be underwritten, regardless of the macro-economic environment. Using data also provides a better experience for the underlying traveller both through validating how they are protected but also in managing the claims experience when there is a failure. The possibilities using data are endless. One of the things we are really excited about is the ability to use fulfillment as an option to redress painful claims experiences.
- Integrated Mitigation – Most travel businesses operate sensibly and Covid forced the industry to change how it managed the exposure to customer monies. So the hard work has already been done and it is now time that the insurance industry caught up. Traditionally the insurance industry has sought to have separate guarantees from travel companies through director guarantees or cash backed bonds which we think places more strain on the policyholder than the perceived benefits.It is also a mis-match between what risk the insurer is taking on which is consumer monies. We use the benefits of how a travel business is managing customer monies to their advantage and again, technology allows it to happen. For our Financial Failure Insurance Product, this means allowing travel agencies to pay suppliers but being aware of when and to who the payments are being made.
4. What do the next 12 months look like for TMU?
We are incredibly excited by the reception we have received by both the travel industry and insurance markets to our products and we look forward to working with partners and businesses to support their needs into the next year. We expect to release our third product into the market later this year, called Travel Distribution Insurance, which will provide much needed coverage for agents and suppliers doing business together, giving them certainty that bookings will be honoured and invoices will be paid.
We are also incredibly excited to roll out our fulfilment claims facility across all applicable products. When a business fails, ultimately the customer would like to travel and continue their holiday rather than be repatriated or refunded. With our technology, we can see for each booking which suppliers have been paid and who is currently travelling. It is our target to facilitate the continuation of products when a travel merchant goes insolvent rather than refund immediately which can often be overly expensive.
5. What advice would you give to travel merchants and acquirers looking to protect their businesses from another pandemic scenario?
The key is data. Ensure the systems you use could can scalably report on the situation of your business and be integrated into a third party such ourselves to be able to show the position of your business. This will allow underwriters of both insurers and acquirers to better understand the risks they are taking on and in both cases, put products in place that continue to give the flexibility required to operate a travel business and ensure customers have sufficient coverage in place to meet legislation such as the Package Travel Regulations. The benefits are evident – lower costs from insurance and acquirers and increased flexibility to manage suppliers.