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Exploring the traveller underinsurance problem

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  • Caponecchia, Carlo
  • Tan, David T.

Abstract

Recent research has found that, in general, travellers are significantly underinsured when travelling abroad. Travel is a unique market among insurance products as there are factors that exacerbate the uncertainty from the consumers’ perspective, such as variable time periods of being insured, variable forms of coverage and scale, level of knowledge of the risks at the destination and the activities to be undertaken. We view the current state of the travel insurance market as inefficient as consumers are deemed generally misinformed and unaware of the intricacies of the products on offer and, we argue, behave sub-optimally due to behavioural patterns and perceptions regarding travel. In this commentary, we discuss issues that are unique to travel insurance products which may distort consumer perceptions and highlight a research agenda to address these issues and improve efficiency in the market.

Suggested Citation

  • Caponecchia, Carlo & Tan, David T., 2019. "Exploring the traveller underinsurance problem," Annals of Tourism Research, Elsevier, vol. 76(C), pages 343-345.
    • Handle: RePEc:eee:anture:v:76:y:2019:i:c:p:343-345
    DOI: 10.1016/j.annals.2018.10.008
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    References listed on IDEAS

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    1. Gerd Gigerenzer & Ralph Hertwig & Eva Van Den Broek & Barbara Fasolo & Konstantinos V. Katsikopoulos, 2005. "“A 30% Chance of Rain Tomorrow”: How Does the Public Understand Probabilistic Weather Forecasts?," Risk Analysis, John Wiley & Sons, vol. 25(3), pages 623-629, June.
    2. Olya, Hossein G.T. & Altinay, Levent, 2016. "Asymmetric modeling of intention to purchase tourism weather insurance and loyalty," Journal of Business Research, Elsevier, vol. 69(8), pages 2791-2800.
    3. Johnson, Eric J & Hershey, John & Meszaros, Jacqueline & Kunreuther, Howard, 1993. "Framing, Probability Distortions, and Insurance Decisions," Journal of Risk and Uncertainty, Springer, vol. 7(1), pages 35-51, August.
    4. Fuchs, Galia & Reichel, Arie, 2011. "An exploratory inquiry into destination risk perceptions and risk reduction strategies of first time vs. repeat visitors to a highly volatile destination," Tourism Management, Elsevier, vol. 32(2), pages 266-276.
    5. Amblee, Naveen, 2016. "The impact of eWOM density on sales of travel insurance," Annals of Tourism Research, Elsevier, vol. 56(C), pages 137-140.
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    Cited by:

    1. Tan, David & Caponecchia, Carlo, 2021. "COVID-19 and the public perception of travel insurance," Annals of Tourism Research, Elsevier, vol. 90(C).

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