The new Ingosstrakh insurance will compensate for the full amount of the tour, but it’s expensive
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Ingosstrakh is introducing insurance for travelers, which should compensate for all costs of tours in case of problems. Previous products did not cover part of the amount that went to travel agent commissions. However, tourists will have to pay a significant fee – 4.5–5.5% of the cost of the tour. In the growing tourism market, such insurance may be in demand, experts admit, noting at the same time a number of risks. The profitability of a product that other market participants do not have is also questionable.
Ingosstrakh (according to Expert RA, based on the results of nine months of 2023, ranks fourth among insurers in the Russian Federation with fees of 62.5 billion rubles) announced the launch of a new type of insurance for tourists and travel agents. According to the terms of the contract, the client can return the full amount spent on the trip, and agents will not lose their commission if the citizen was unable to travel due to an insured event. The insurance covers trips within Russia and abroad. Traditional insurance policies cover travelers’ risk but do not take into account agent commissions.
The company explained to Kommersant that on average a policy costs about 4.5–5.5% of the insured amount. The insured amount is equal to the cost of a tourist trip purchased from a travel agent. If we talk about the average cost in the country, it is about 150–160 thousand rubles. per tour, but in large cities the average amount can be almost twice as high, clarifies Olga Orlova, head of the sales and client base development department of Ingosstrakh.
According to the executive director of the Alliance of Travel Agencies association Natalya Osipova, the commission acts as a payment to the agent for the work of selecting a tour. It is refundable only in emergency situations, for example, when the trip is canceled due to a threat to the life and health of the tourist or if the trip was canceled due to the fault of the tour operator. In such cases, the entire amount paid for the tour, including the agent’s commission, is subject to payment, the expert notes.
After settlement with the traveler, relations between agents and tour operators are built differently, notes OnlineTur.ru representative Igor Blinov. At the end of the billing period, agents can transfer funds minus a commission or transfer all funds and receive it from the tour operator in the future. The average agent’s commission for the sale of a standard organized tour, according to the expert, is 7%. Taking into account the costs of acquiring and current activities, real earnings are 3.5%, clarifies Mr. Blinov.
According to experts, such insurance will help participants expand the pool of clients. “This is additional revenue, growth of the client base, increasing customer loyalty, expanding the line of offers for them,” notes Bank.ru representative Alexander Makarov. The number of tour operators in Russia increased by 10% by the end of 2023 (we are talking about more than 2 thousand companies), that is, “the product has entered a growing market,” says Innokenty Lukyanov, CEO of the insurance consultant AST.
However, according to Mr. Makarov, the risk may be negative feedback from clients, when, as a result, insurance will not cover what was expected. According to the expert, it is likely that other market participants are not launching similar products because they either “do not see the profit in this segment or do not consider it large enough.”
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