Is the baby boomer generation edges towards retirement age, there are expectations that the numbers of "Snowbirds" – those fortunate retired folk who flock south for the winter – could increase dramatically. "The big deal now is that the boomers are coming," said Michael MacKenzie, research and communications officer with the Canadian Snowbird Association.
"There’s a bit of a lull right now but in the next five to ten years there’s going to be an all out assault, I would think, of new Snowbirds."
According to Mr. Mackenzie, upward of 200,000 Canadians travel south each year for stays between two and six months. Most of these Snowbirds go to southern states in the United States including Florida, Arizona, Texas and California. And most of them are buying travel insurance.
"If you’re a Snowbird and you’re doing this every year, you’re buying insurance," said Mr. MacKenzie.
In dealing with their aging clients, advisors should consider offering this kind of insurance plan and even shorter term travel insurance coverage – not necessarily for the money, but for the increased client satisfaction, say some advisors.
Ken MacCoy, insurance advisor and founder of RITE Partner in Chilliwack, British Columbia, tells the story of an elderly couple who recently came to see him for travel insurance. The gentleman was 86-years old and the lady was 73 years old. They were going away for three days and wanted to make sure if anything happened during that time they would be protected. The cover Mr. MacCoy arranged cost the couple $63.13. Shortly after Mr. MacCoy had finalized the insurance, the couple called to say they had changed the dates of their trip. To accommodate this, Mr. MacCoy cancelled the plan and had it reissued for the new dates. He then personally dropped it around at their house. "I made $12," said Mr. MacCoy. "After paying tax, I made $6. After taking into account my time, I was probably $300 in the hole."
Despite experiences like this, Mr. MacCoy continues to promote his travel insurance business. The question is, why?
It’s a value-added service, he said. "It’s nice to be able to go to a place and have one-stop shopping. If I handle their life insurance, their disability insurance, their retirement planning, well why should they have to go somewhere else for their travel insurance because it’s not worth while for me to do it?"
The elderly couple went back to visit Mr. MacCoy. The next time, however, was to pick up business cards so they could hand them out to people in their condominium complex and to their friends when they are out for coffee. "So it has increased my business and the spin-off business is where it will ultimately pay."
Limited provincial coverage
One of the main drivers for travel insurance is the limited provincial coverage Canadians receive. Coverage varies in the different provinces but the standard seems to be about $100 per day for in-patient emergency medical services and $50 per day for out-patient services plus payment of out-of-country emergency physicians’ fees at a rate equal to what a physician would receive in the person’s home province. While this provides some financial protection, there are many horror stories, particularly from hospitals in the United States. Mr. MacCoy, for example, had a 22 year-old client who had a heart attack while abroad. The young man was taken in an ambulance to a hospital where he had a pacemaker put in. Fortunately his travel insurance covered the $39,000 bill.
Travel insurance offers a unique opportunity to tap into a potentially lucrative demographic. But it’s not without its challenges. "You have to know what you’re doing," said Mr. MacCoy. "Because if you don’t, you’re leaving yourself open to a potential errors and omissions claim."
Mr. MacCoy has a number of different insurers he goes to for travel insurance including Manulife Financial, Travel Insurance Company (TIC) and Group Medical Services (GMS). He likes to keep his options open because of the varying exclusion clauses, with some being more restrictive than others.
Travel insurance is a minor specialty of Mr. MacCoy and he strongly promotes his involvement, particularly on his website. For an insurance broker to promote travel insurance is quite unusual. The more common approach is that taken by Gregory Bonnell, insurance advisor and general manager of RMFP Inc. in Halifax, Nova Scotia.
Mr. Bonnell is a bit more passive in selling travel insurance. He does arrange it for his clients when asked, but, because of the complications with exclusion clauses, he doesn’t make an effort of actively promoting it. "It’s not like life insurance or segregated fund products where you kind of know what you’re dealing with," he said. "Even the application process tends to not be as clear. And individuals don’t really seem to understand what they’re getting."
Mr. Bonnell has chosen to focus his offering on Manulife and Blue Cross. "It’s impossible to know everybody’s product," he said, "and particularly on the travel side the margins are so slim."
What to look for
Many of Mr. Bonnell’s travel insurance clients fall within the Snowbird category. Because they are away for long periods of time it is important the cover is suitable. One of his success stories is protecting one of his Snowbird clients from a $35,000 hospital bill.
When selling travel insurance Mr. Bonnell has two priorities: making sure the client is covered for immediate medical treatment, and ensuring the client can get back home if needed.
Other features Snowbirds are particularly interested in are coverage for pre-existing medical conditions and having no age restrictions, said Christopher Bradbury, vice-president communications, Medipac Travel Insurance. Medipac have been the official insurer of the Canadian Snowbird Association since 1992.
There are a couple of reasons why Medipac focuses on pre-existing conditions, said Mr. Bradbury. Firstly, to have lived to an age where they can travel down south for the winter, most Snowbirds have some sort of condition they have do deal with. Also, any travel insurance must respond to pre-existing medical conditions because that is what is most likely to give rise to a medical emergency when away. Before issuing travel insurance, Medipac ensures the client is stable and has been so for a period of time dependent on the type of condition.
Without disclosing actual numbers, Mr. Bradbury said they insure tens of thousands of Canadian Snowbirds. He says that to ensure quality control, Medipac only sells directly. "If we put our program through an agency base where insurance brokers and travel agents sell our product, there’s a higher chance that people who are ambitious to make sales and to collect the commissions for those sales might be a little less diligent with the application process," he said.
TIC, on the other hand, sells more than half of its travel insurance through brokers, said Gino Riola, the company’s director of marketing. And, it is the advisors who mainly deal with the Snowbirds. Travel agents often handle the simple insurance requests, but because of the length of trips and the age and health state of the snowbirds, a more consultative approach is required. Insurance advisors, said Mr. Riola, are more adept at providing such a service.
TIC has done a lot of research into the Snowbird market and found it to be active. To tap into this demand, TIC recently launched a travel insurance product specifically for Snowbirds called Take Flight . "It’s a simple matter of us responding to market needs and being an aggressive competitor in that field," said Mr. Riola.
A big focus of TIC is underwriting at the point of sale rather than at the point of claim, he added. Especially for the mature Snowbird market, TIC wants to make sure that all the checks and questions have been done prior to the trip, "so that we’re sure that when a client goes off on holiday and makes a claim, that he or she is actually covered."
Other features TIC has introduced specifically for the Snowbirds is an option to get a free flight home and back if there is an at-home emergency. And, as well as providing emergency transportation to an appropriate medical facility or Canadian hospital, therezis also the option to transport a family member or friend to your bedside should the need arise.
One of the restrictions of Take Flight is its age restrictions. To qualify, one must be at least 50 years old and for single trips younger than 90, and for multi-trips younger than 75.
Manulife is another major provider of advisor distributed travel insurance. Its product offers coverage up to $5 million and includes a long list of expenses including transportation to bedside, return of dependent children and travel companion, vehicle return and trip break. It has no maximum age limit but has stringent qualification criteria for people over 55. Price varies depending on age, length of trip, and health status.
For those who don’t qualify for Manulife’s Travel Insurance, Manulife offers an Individual Medical Underwriting Plan that covers the same benefits except for the Trip Break, but has no pre-existing condition exclusion. It is naturally more expensive.
So if you are thinking about adding travel insurance to your suite of products, don’t necessarily expect to make the big bucks. But as Mr. MacCoy found with the elderly couple he went the extra yard for: "they thought I was the best thing since sliced bread and they refer a lot a business to me."