What’s on Dec? | Episode 21 | The evolution of travel insurance

Stream this episode and others in our series on Spotify!

Featuring:  

Kyle Sparkman
Managing Director & Head,
Allianz Global Assistance Canada 

Travel insurance was evolving long before tariffs from the United States upended the global economy. 

In Canadian Underwriter’s latest What’s on Dec? video podcast, Allianz Global Assistance Canada’s Managing Director Kyle Sparkman discusses underwriting changes that emerged from the COVID pandemic and the more recent concept of ‘revenge travel.’ 

Looking at tariffs and ongoing geopolitical concerns, Kyle describes how this is influencing Canadians’ travel patterns to the U.S., and where travellers are heading instead.  

He also discusses pre-existing conditions and how telemedicine is being integrated into the product. 

Finally, Kyle outlines how travel insurance providers are working to simplify the application process, and the shift towards digitization in claims processing. 

Audio transcript  

Intro | Jason Contant: 

Hi, I’m Jason Contant. I’m Associate Editor at Canadian Underwriter and host of our podcast series, “What’s On Dec?” Recently, I sat down with Kyle Sparkman from Allianz Global Assistance Canada to discuss what’s new with travel insurance. We discussed how U.S. tariffs are affecting travel patterns, how the COVID pandemic changed travel insurance underwriting, and what insurers are doing to simplify the application process.

Jason Contant: 

Yeah, so I guess just to start, I think it’d be good to kind of get into, you know, how this whole tariff situation with the U.S. is affecting the travel insurance product. You know, like as we’ve been hearing, I guess flights to the U.S. have been, have dropped dramatically, right, following the imposition of tariffs. And I don’t have any specific stats. It’s more like it’s, I’ve heard this anecdotally. So, you know, I guess first question is just like how has travel insurance been affected given this ongoing tariff situation?

Kyle Sparkman:

Yeah, thanks. And it’s something that is kind of the unknown right now in terms of what the impact is going to be over the long term. I think the way I think about travel insurance and tariffs is our snowbird population that does a lot of the winter travel was already travelling during our winter travel season. They were already in Florida, they were already in Arizona. And when the tariffs and some of the geopolitical uncertainty came out, they were already thinking about their times coming back into Canada from the U.S. But what we have seen is as people have started to plan for their summer travel, we’re seeing a massive difference in year-over-year changes in where people are buying travel insurance policies to cover. I was looking this morning in preparation for our discussion today, and the U.S. is down anywhere between 10 and 25%, depending on the cities. Some of the cities that were most surprising to me, the New York area was down about 25%. LA was down probably 30%. Some other locations not so much, but people are definitely choosing to travel less from what we’re seeing from a travel insurance market perspective. The good news is people are considering where they’re going to go now. So we are seeing an uptick in Europe, we’re seeing an uptick in Australia, we’re seeing an uptick in Asia, and potentially most important for us as Canadians, we’re seeing an uptick in people travelling domestically. So, a lot of travel insurance bookings are covering trips within Canada, which is an interesting thing that maybe people haven’t thought about in the past.

Jason Contant: 

Yeah, for sure. And does it make a difference, like in terms of their travel insurance, if you’re staying domestic, like does the product change in any way?

Kyle Sparkman:

Yeah, I think it makes a difference, but maybe not in ways that people think about. So, when people are travelling domestically, you still need to think about the value of your trip. So, if you want trip cancellation or trip interruption, your baggage benefits, bags unfortunately still get lost, you still have impacts where you might be going on a golfing trip in the mountains and your golf clubs don’t show up. So what do you do? So, considering those type of what I would call more inconvenience issues, are things that people should consider. Also needing to cancel does come up from time to time, and having the peace of mind of having yourself covered for a cancellation and protecting your investment of your vacation, ’cause in reality, this is an investment. People invest in life experiences, and you put sometimes good money across, and unfortunately things do come up. The final thing that I would say is medical is important still, even though we do have good government health insurance, it doesn’t cover everything, especially when you’re outside of province. So, if you’re far from home and something terrible happens, and you need to have somebody come out to join you to be at your bedside, or if you need to get repatriated, cost of ambulance, cost of dental, there’s different things that aren’t covered in our government healthcare, and having those unexpected expenses can even happen from a medical perspective when you’re closer to home. Canadians usually think about that when they’re leaving the country, because we know, I always say Canadians are generally unprepared for the medical situations that they’re going to face in different countries across the world, but that can happen in Canada too. So you have to think about that. So, our products, and quite frankly, all of the products in travel insurance, are thinking about what you need when you’re closer to home as well as when you venture farther afield.

Jason Contant: 

In terms of underwriting, do you find, has there been a change in how you’re underwriting the product? Like, I don’t know if it’s like a material change in risk, but has this sort of affected how you’re underwriting the product now?

Kyle Sparkman:

Yeah, I don’t think we are making different underwriting decisions in the short term, as it relates to tariffs and geopolitical uncertainty, and some of the things that are happening in the world. We are prepared for natural disasters. Different things happen at different times of the year. So, you’re always considering those choices as you think about underwriting. I think what might be interesting to people is the more important underwriting changes that we’ve had to look at are still coming out of the COVID pandemic. So, if you think back to 2020, everybody stopped travelling. You go to 2021 and as Canadians, we probably didn’t travel very much in 2021, but I kind of think of 2022, 2023, and 2024 as a little bit of a slow burn back into travel. And last year, 2024, we actually had more of the people that probably were the least healthy people, that were probably the people hunkering down for a little bit longer as a result of the COVID pandemic, returning to travel destinations. So, in 2024, I think Allianz, as well as a number of our competitors, saw a change in the medical costs, and the medical cases that we were seeing out of travelling Canadians. And I think it was just that revenge travel concept, that a lot of people talked about in the industry, actually wasn’t just a one-year thing, it was probably a three-year thing. And this is the first year where I’m actually feeling like we’re actually back to a more normal state where people are making similar travel decisions. It doesn’t have to do with not having travelled in three years because of the COVID pandemic, but now we have to deal with Trump tariffs, these other wars, other concerns that people have when they’re travelling. So, we’re ready for this. It isn’t a long enough duration activity or event for us to actually have to make some changes to underwriting, but we’ll have to see how long this persists, and if Canadians are actually going to different locations more frequently.

Jason Contant: 

Yeah, it’s interesting this whole idea of, like, revenge travel, right? So are you seeing that now, I guess, it’s a little bit more, you know, is it similar to how it was pre-pandemic in terms of travel insurance levels and flights, and that sort of thing? Like is it pre-2020 levels?

Kyle Sparkman:

Yeah, we always, within our company, we always look at 2019 as the last year, and I always think it was kind of unfortunate, because things were really starting to go into a great direction coming out of 2019 and into early 2020. If you set your mind back just before March of 2020, everything was going great. People were travelling all over the place. So, we really look back to 2019 to see where we think people are getting. And I think there is still some changes if you look at some of the statistics on airport traffic. Airport traffic kind of returned and exceeded 2019 levels during 2024. So, we got back to a normal level of behaviour in airports. If you’ve had the opportunity to walk through an airport, it’s just as busy as anything I remember pre-pandemic. It’s everybody’s going wherever they want. I think there is a difference between personal travel and business travel. We spend in Allianz a lot less time on business travellers, from a travel insurance perspective, because it’s usually a different demographic or set of activities that a business traveller needs. But personal and consumer-based travel I think has returned, and if not exceeded 2019 levels coming into 2025. Obviously, there’s some other factors happening right now with flights going to different places, and a reduction in airlines going to certain locations south of the border, but we’re still seeing activity in people, with a really high desire to travel, which I think is fantastic.

Jason Contant: 

Yeah, definitely. And I guess if we get into sort of the health aspect again, right, like I know there’s typically exclusions for pre-conditions, right? And so do these exclusions vary by destination?

Kyle Sparkman:

Yeah, I don’t, I wouldn’t say they vary by destination. I think the way to think about exclusions, and what we would call pre-existing conditions, is we’re thinking about the traveller, and the traveller wants to make sure that they’re covered for unexpected events, and insurance is there, quite frankly, with travel insurance for unexpected events. A lot of times a lot of the older Canadian travellers are really looking at the wording, and brokers who are selling the product are really trying to make sure that they’re covering their customer the best way that they can. We’ve done a lot of work to simplify the application process. If you think about pre-existing conditions as active medical situations that are happening in a very short amount of time before travel, or a significant illness that is affecting your ability to travel, or, heaven forbid, you’re in a active cancer situation, those are the type of things that people really are concerned about. Our medical questionnaire at Allianz, we’ve gone from something like 27, 30 questions that people would have to answer down to three. And we’re looking to make sure that those obvious exclusions, meaning you’re in an active health situation, or you’re too sick to travel, we’re probably not looking to insure those people. But other people that have well cared-for conditions that are well-medicated, they’re seeing their doctor, they’re taking care of themselves, those things should be well-understood and well-covered in our language, and we’ve tried to improve that stuff. We’re still looking at our language, because I still think that there’s a lot of concern as it relates to medical conditions for older Canadians specifically. So, our product work is focusing on simplifying language, making simple things like medication changes not something that changes stability periods, because these are all things that snowbird travellers and older travellers, they’re going through the wording in intimate detail to make sure that they understand if they’re covered. And it’s important, because it can be a really costly expense if something is missed or misrepresented. So, we tried to simplify it. Destination, back to your original question, I don’t think really affects it. It’s really about how that traveller is as they present for travel insurance.

Jason Contant: 

Yeah, it’s interesting, this whole thing about simplifying, ’cause as you know, like other products do that, like cyber for example. A lot of times they’re trying to simplify it or streamline it, right? So, do you use like AI for that to sort of simplify it to some degree?

Kyle Sparkman:

Using AI to get the wording to be easier, to look out for things that might be confusing or cause inaccuracies, are things that our product team is constantly looking at. We’re trying to apply the concept across all of our products.

Jason Contant: 

Yeah, and this is what we hear with like cyber for example. I do hear this that people are trying to simplify it, ’cause, you know, to go through a 40-question application that’s just people get turned off, and there’s too many questions. So the more you simplify it makes it easier for the consumer as well, obviously, right, so?

Kyle Sparkman:

Yeah, when I joined the company we partner with other partners, we support their insurance in different ways. We’ve been a third-party administrator for other people, and some of the med questionnaires, and the same way you had mentioned for cyber or other types of insurance, if you ask too many questions, you actually create conditions whereby the consumer is going to potentially inadvertently misrepresent themselves. We had some partners who had questions about medical conditions in different sections of their MedQ, or their med questionnaire. And if you answered no to one and yes to another, it would be an inconsistent answer. And you don’t wanna do that. You want the consumer to not have to worry about that stuff. You want the consumer to share what’s going on with them so that you’re appropriately underwriting the risk. But when you’re getting into confusing situations that make it difficult for the customer, it’s really not great. And especially if you’re trying to get somebody who might be concerned about their E&O risk, or other things as a salesperson, we really want to simplify that stuff.

Jason Contant: 

One of the things I was wondering is like how do Canadians navigate foreign healthcare? Like, as they’re heading to destinations further than the U.S.?

Kyle Sparkman:

Yeah, I’m going to use a phrase that I always use when I’m talking to our partners, is Canadians are very unprepared for the medical environment that they face when they go outside of Canada. And that includes the United States. When you go to the United States, often if you show up, they’re asking you for your insurance or a credit card as the first question. And that’s even before understanding what you’re there for. When we go with our government health insurance inside Canada, we’re often, you have a government health insurance plan and they will invite you in. And it’s, you’re not going through that state. When you’re in the United States, or I’ll say in Western Europe, you’re ending up in situations where the healthcare is fairly high standards, you’re not worrying about the quality of care. But that would be the lower frequency occurrences for where a lot of Canadians travel. And there are always places where Canadians can go to get top-tier healthcare. I always think about affordable, accessible, and appropriate care. If you don’t have all three of that ‘Triple A’ concept that I just brought up, you might have a concern. And often when you’re travelling in different locations, your Google search might get you to the wrong place. The taxi driver definitely will get you to the wrong place. Even hotel concierges at some of these places will get you to a place where we might not want you to go. And that can be affordable, appropriate, or accessible. I’m always about appropriate first, make sure the quality is good. I’m next about accessible. It needs to be close and relatively around where you’re geographically located, and then affordable comes last. But I always advocate, whoever your travel insurance provider is, in the event of a medical emergency, other than what I would call a 911 emergency, always call your travel insurance provider first, and they’ll guide you to the best place for you under your needs. The other concept that I’ll bring up is telemedicine. Prior to the pandemic, we had started some work around adding telemedicine or teleadvice to our platform. And Canadians just weren’t willing to do the video conference with a doctor, or get a prescription. COVID changed that, and we were just at the process of implementing it. And what we had found was about two-thirds of the medical situations that Canadians face while travelling can be handled with a telemedicine interaction. Right now, we cover Canada, U.S., and Mexico. Next month, we’re going to be adding 93 other countries with telemedicine coverage. So instead of going to a hospital, instead of looking for a clinic in a place that you’re unfamiliar with, we can get you to a licensed physician who can take care of your needs, in most cases, write you a prescription, and if not, refer you to the next best place for you if they’re not able to handle it for that one-third of situations. So, really using your travel insurance provider, and thinking of them as the friendly voice and the arms around you at home, is what Canadian travellers should be thinking about, regardless of where they are in the world, whether that’s the United States or anywhere else.

Jason Contant: 

Yeah, for sure. Yep. And now if I sort of, I’m thinking like towards the future, right? In terms of opportunities, I guess, you know, are there opportunities for brokers? You know, like when it comes to travel insurance, like, for them selling it, is that an opportunity for brokers?

Kyle Sparkman:

Yeah, absolutely. We’ve spent a lot of time on the broker market over the last 18 months, and it’s really been a high-area focus, because we believe brokers can act as trusted advisors. They can look at… A lot of times people are either overinsured or underinsured. And you don’t know that. So when a consumer calls my telephone team, we’re going through those assessments. How much do you have on a credit card? How much do you have on your employment benefits? And I always say the people that are asking about insurance often have some form of coverage through one of those other mechanisms. The people that don’t ask are the people that I’m concerned about. And I think brokers always can speak to their consumers and customers and give them advice, or bring some more markets to their customers. Again, helps make stickier customers. We have great annual plans and renewing plans that can make it an annuitized product for brokers. Maybe I’ll just add, we’ve had some interesting partnerships with Allianz in the last little bit. We partnered with Trufla, who is making the purchase and sale process much easier, bringing in portals, bringing different ways to present the information. I’m investing a lot of money in my own marketing teams, making sure that people and brokers have the knowledge and information they need to sell. A lot of brokers were too afraid to sell travel insurance because of things like E&O risk from those medical questionnaires. We’ve spent a lot of time making it easy to sell, easy to understand. And then like I said, I think it makes stickier customers. So it’s a market that we spend tons of time on.

Jason Contant: 

Yeah, for sure. And now that the landscape has sort of changed in effect, right, with the tariffs and that, and this could be a permanent change, we’re not sure, right? Like, it seems like Canadians now are mad enough in general that at least for the short term, right, that they’re not going to the U.S. So, is there any sort of like new opportunities for coverage, like new aspects of the product perhaps, given this situation?

Kyle Sparkman:

I don’t think that this current market noise is something that will make me change my products and services. What I will say is we’re looking for different ways to expand out of traditional travel into other ways to assist people. Things like athletic events, or we do work with ticketing companies. You travel a lot to go see your favourite concert. So, finding associated products and different consumer needs is really what we’re looking for. And if this does persist, if people do really make a marked change, and look to travel less to the U.S. and more to other destinations, there is probably some of that underwriting change that you’ll do, some pricing changes that you’ll do. Medical’s a great example. The most expensive place to get medical in the world is the United States. So, if you choose to go elsewhere, you might actually have lower cost travel insurance, because the cost that we’re covering is just something that’s more reasonable. I always say a broken leg in Vegas can cost $1.5 million, and we have the cases to prove that. A broken leg anywhere else in the world is probably nothing anywhere close to six figures. So it’s just that relevance that, as preferences change, as locations change, we will look at that, and we’ll make sure that we’re giving a competitive product with a proper price that covers people the most appropriate way.

Jason Contant: 

Yep. So, just last thing Kyle, like in terms of general trends, are you seeing sort of any general trends in the travel insurance market?

Kyle Sparkman:

You’re gonna get insurance in the palm of your hands in a much better way, so it’s always travelling with you. It’s gonna track your flight trends, it’s gonna look at lounge access, it’s gonna look at these different things. It might bring in eSIMs, it might bring in cybersecurity. There might be a whole bunch of different things that we can bring in, just from being a little bit more with the customer while they travel, which is I think the emerging trend. We’ve already moved into claims, making it much easier for claims to get submitted. We used to get something like 80% of our claims by mail, and now we’re over 80% digitally submitted to us through our claims portal. So, some of the more emerging competitors are looking at doing things much more digitally, taking out all the paper, which are things that we’re trying to get to as well. I will say there are some strange competitors in market that are looking for, that are presenting themselves with kinda cancel-for-any-reason-type benefits, but not calling themselves insurance. And we have some issues with that. It’s insurance. You’re covering a loss, you’re covering an unexpected event. The trends are trying to make it easier for the customer, trying to make it more obvious that you should call us in a time of need. So many people think to call somebody else, and we’re really there for the consumer when they’re outside of the country and they don’t know what to do. Making sure that you’re on the customer’s phone with them when they’re trying to find the locations, and do different things like that, are really the things that are gonna make it easier for a customer to always come back to you.

Outro | Jason Contant:  That wraps up today’s episode. We hope you enjoyed the discussion. Thanks for tuning in, and we’ll see you next time on “What’s On Dec?”