Upgrading Travel Payouts with Instant, Convenient Digital Choices

From receiving mobile flight alerts to making itinerary changes on the fly, travel is more seamless thanks to digital capabilities that put the world in every adventurer’s pocket. But sometimes the journey doesn’t go as planned. High travel demand is contributing to an increase in delays and interruptions at the airport and beyond—and when consumers rely on travel insurance to cover unexpected events occur, the refund or travel insurance payout experience is often far from convenient.

Today’s digital solutions are changing the landscape by making travel insurance payouts faster and simpler. By streamlining the claim settlement process and introducing new payment options and capabilities, from virtual cards to popular apps, airlines and travel insurance companies can provide a smoother journey for their customers while reducing the cost and administrative burden of issuing payouts. Along with their cherished vacation memories, travelers will remember how easy it was to get paid reimbursed for their lost luggage, or missed flight or medical emergency—and be more likely to recognize the value of travel insurance when it comes time to book next year’s trip without hesitation.

Travel insurance payouts today: a rocky road

About 18% of consumers who purchased travel insurance in 2023 made a claim, according to a survey by Personal Finance Insider—and about half of those consumers said they were not satisfied with their outcome. One top cause of consumer frustration is being left in travel insurance limbo. After waiting weeks to months for their claim to be processed and approved, policy holders must wait even longer for a check to arrive in the mail.

Let’s unpack that check. According to Onbe and NRG’s 2024 Payouts Landscape, paper checks are an unpopular option among consumers, with 53% stating that digital and electronic payments are more secure than physical payments and 52% saying they would not choose checks or cash when receiving a payout. Over three-quarters of consumers said they prioritized payment choice—which insurers companies can’t offer if they default to paying by check.

The new consumer protections recently passed by the U.S. Department of Transportation, requiring airlines to quickly refund consumers for inconveniences such as canceled flights, create new urgency around switching to a more efficient payout strategy. Switching to a digital-led solutions payout solution can help travel insurance companies make it simple to pay faster while offering consumers’ preferred payment options, such as a virtual card sent via email for immediate spend. In theory, travelers could file a claim for lost luggage or a travel delay and receive their payout right away, equipping them with the funds to replace their essentials or book a last-minute hotel room. Even in cases where a claim requires more documentation and can’t be settled immediately, travelers can still enjoy a stress-free payout despite experiencing some inconveniences on their trip. Knowing they are in good hands with their airline or insurer brings customers peace of mind when booking future travel—and makesinsurance a must-have for every journey going forward.

Smooth sailing with digital payout solutions

Travelers aren’t the only ones who benefit from a smoother insurance payout experience. With modern digital solutions, airlines and insurers can reduce their payout costs and ease their team’s administrative burden. Reducing the reliance on checks, which can cost up to $12 each when all materials and expenses are factored in, leads to significant savings while improving the security of every payout. Check fraud is on the rise, according to the Association for Financial Professionals, making digital and electronic payment methods the obvious choice. Going digital and automating the payout process also helps reduce errors and saves time and resources—so payers insurance companies can focus on their core business activities, including processing claims quickly and providing excellent customer service.

Escheatment, the process of turning over unclaimed property to the government, is another area where travel insurance companies, in particular, can benefit from partnering with a payment provider. Escheatment laws vary by state and are notoriously complex, putting insurers at risk of steep fines for accidental noncompliance. Switching to a digital payout solution not only improves visibility, ensuring that each payout reaches its intended recipient, but providers such as Onbe can help streamline and automate the escheatment of payouts that remain unclaimed—preventing errors and saving time for busy finance and accounting teams.  

As the travel insurance industry continues to grow rapidly, in response to the increasing popularity of travel in 2024,removing friction for both consumers and employees is key to keeping pace with demand. While a dose of the unexpected can enliven any trip—or at least make for a good story later—the refund or insurance payout experience should be predictable and smooth. That’s where Onbe’s payment solutions come in.