There are two compelling reasons that advisors should ensure that their sun-seeking senior clients have appropriate Snowbird travel coverage in place before they fly south this winter. First, it could prevent them from financial devastation should they require medical attention while out of the country. Second, serving clients' travel insurance needs is an extra point of contact with clients that can help build the advisor-client relationship, say experts interviewed by The Insurance Journal.
Robin Ingle, Chairman and CEO of Toronto-based Ingle International Inc., estimates that about 30% of financial advisors will be involved with their clients’ travel insurance to any degree. "It should be much more."
What prevents advisors from offering this service to their clients is that they are unfamiliar with these products, Mr. Ingle says. An advisor who lacks expertise in this area is likely to shy away from it. "Often advisors, because of the complexity of this product, are concerned about the error and omissions exposure of selling it themselves."
Also, many advisors are concerned that they could anger a client by making a mistake with the travel insurance and jeopardize the rest of the business they have with the client, he adds.
This is why Ingle International, which works with 450 advisors in Canada as a Managing General Agency (MGA), offers advisors two ways of handling travel insurance cases. Some advisors want to learn about the products and sell them to their clients directly. For these advisors, the company will help train them and provide them with a website where they can set up a customized 1800 line. These advisors are paid a commission on their sales.
The second way they do business with advisors is through referrals. Ingle International agents will take care of filling out the medical questionnaire with the client and then shop around to find the most appropriate plan. In the event of a claim, Ingle International is also involved. Advisors are kept up to date through a report. They are also paid a referral fee for bringing in the business.
Mr. Ingle says his company is finding a growing need in the advisor community for such arrangements. Some advisors are presently finding it difficult to keep their revenue up. They don’t want another agent or financial institution to take away a client by first offering them Snowbird insurance and then perhaps winning away all the business, he explains.
"These advisors are between a rock and hard place. They want to keep the relationship strong with their client, but they are afraid to provide Snowbird insurance because the complexity of it is frightening. That’s where we take away the worry."
Patrick Lavoie, Marketing Vice-President of Securiglobe, a Montreal-based MGA, agrees that working on a referral basis is a worry-free solution for advisors looking to meet clients’ travel insurance needs.
For advisors, trying to sell the product themselves is daunting. "There are 15 carriers with 15 medical questionnaires. Brokers don’t have the expertise or time to go through this."
"The way we do it, it takes the E&O liability exposure off the brokers’ shoulders."
When an advisor refers a client, Securiglobe will contact the client and present itself as "the travel insurance partner of their advisor." Mr. Lavoie explains. Securiglobe deals with 12 different travel insurance providers, which gives the firm access to 30 different travel insurance programs.
Advisors who refer clients are paid a referral fee negotiated with Securiglobe. If a financial services firm refers a large volume of clients to Securiglobe, they may be given a dedicated toll-free line.
Mr. Lavoie believes offering travel insurance to clients on a referral basis enables advisors to complete their product offering. Like Mr. Ingle, he also believes this is important from a competitive viewpoint, especially when faced with direct insurers. For example, a client might start with buying travel insurance through a financial institution and then start buying their mutual funds through this institution, he says.
The financial risk of not having coverage or inadequate coverage is serious, Mr. Lavoie underlines. If a client gets ill in the U.S., for example, it is easy to rack up a bill of $100,000 or more.
Asked about cases he’s come across, Mr. Lavoie mentioned a man in his late sixties who had no pre-existing medical conditions, but became seriously ill during his stay in the U.S. Over 10 days in a Florida hospital, his bill amounted to more than $400,000. He passed away on the 11th day in hospital. If he didn’t have travel coverage, his family would have been mourning him and dealing with the burden of this heavy medical bill.
Mr. Ingle says some Canadians believe that they can travel without insurance coverage and just return to Canada and ignore any U.S. hospital bills. The border does not protect Canadians from such bills, he warns. "The U.S. hospitals can and will collect in Canada."
For average cases, Snowbird coverage is affordable, Mr. Ingle adds. He describes an average Snowbird client as a 65 to 75-year-old with one or two minor chronic conditions who is planning a three to four month stay south of the border. A Snowbird plan for this this average case could cost about $750 to $1000 and that would provide $5 million of coverage, he explains.
Mr. Ingle says the demand for Snowbird insurance and other travel products that meet seniors’ needs is increasing. First there is the aging demographic, but also people living longer and doing more. "There is a big difference between the 65 to 70-year-old of today and that of 20 years ago…Today’s are taking adventure holidays…they’re climbing Mount Kilimanjaro!"
For a financial advisor, asking about travel insurance needs, can even win new clients’ other business, says Mr. Ingle. "A lot of agents use it as a hook to bring clients in, or an anchor to keep them."
Garfield Moffatt, an advisor with Truro, Nova Scotia-based MacLellan and Moffatt Financial Inc., a wealth management and wealth protection firm, says his firm sells Snowbird insurance and other travel insurance products for the latter reason. "We want to wrap out arms around our clients one more time." He also considers it another way that the firm helps to protect a client’s wealth, since an uninsured medical problem outside of Canada could seriously erode someone’s capital.
However, while protecting its existing clients’ wealth was the reason the firm began selling travel products more than a decade ago, he has found that over the last six years that this business line has been bringing in more and more retail clients through word of mouth. By retail clients he means people who come in just for the travel products and do not have any wealth business with the firm. But once in the door, there are sometimes opportunities for cross-selling.
While travel insurance is still a very modest part of MacLellan and Moffatt’s business, it has grown enough that the firm now has one specialist on staff who works only with travel insurance and health plans.
To avoid errors, he recommends that firms who want to get involved in this niche either have someone on staff who understands these products well and how to fill out the medical questionnaires correctly, or refer the business. "If you’re too busy to do it, don’t do it."