Flights around the globe have been grounded for months to reduce the spread of COVID-19. Even though many countries are starting to ease lockdown measures, there will be a lag in bringing business travel back compared to holiday travel. Sales of business travel insurance will remain at a standstill for a while thanks to COVID-19.
Business travel accounts for a small proportion of travel insurance policies held by consumers.
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According to GlobalData’s 2019 UK Insurance Consumer Survey, just 1.1% of respondents indicated that they held this type of travel policy. A holiday is by far the most common reason for travel, as cited by 86.0% of policyholders. While the recovery of the travel insurance industry will be largely dictated by the ability – and willingness – of holidaymakers to travel, the impact of coronavirus will have longer-lasting effects on business travel.
During the lockdown, face-to-face interactions have been limited. Companies have scrapped business meetings in favour of remote engagements through the likes of Zoom and Teams. Once there is a sense of the new normal and employers ask their staff to return to the office, companies are likely to limit business travel to a minimum. Employers have a duty of care for their employees and, provided that governments continue to recommend against all non-essential travel, scheduling business trips will be a non-existent activity. Furthermore, many companies will reassess the effectiveness of remote meetings and balance the outcome against the benefits, and costs, of sending staff on business trips.
It is likely that employees will return back to the office on staggered hours or on a rotation basis to manage densities. This will contribute to a generalised feeling that it is still not entirely safe to carry on with life and business as usual, leaving employees unwilling to travel for business purposes.
The prospect of having employees quarantining themselves when travelling abroad and then when returning back to the country, potentially for a total of 28 days as a result of business travel, will make it unattractive – if feasible – to employers. Where business travel is considered necessary, employers might move away from sending business executives on frequent and short trips in favour of less frequent travels of longer duration, enabling executives to cram in more meetings.
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By GlobalDataEqually, coronavirus will squeeze the budgets of many companies. This will result in operational cuts in areas that are not deemed strictly necessary, leaving business travel in the spotlight.
Shifting to a new normal during lockdown was relatively straightforward, if only because it was imposed, but returning back to the old ways will be complex. Reaching pre-pandemic levels will be challenging for most businesses, regardless of the industry. Meanwhile, customers will have adopted new ways and expectations are bound to change. The travel insurance industry is set to take years to recover. Travelling for business purposes will lag behind the recovery trajectory of the wider travel insurance space.
