ISCONTOUR 2025 Tourism Research Perspectives

The Impact of the Covid-19 Pandemic on Travel Insurance Purchases and Factors Affecting Consumers' Choice of Purchase Channels

Thuy Nguyen Thi Hong,
tnguyenthihong.imte-m2023@fh-salzburg.ac.at

Aisha Jagne, ajagne.imte-m2023@fh-salzburg.ac.at

Halimat Shadia Abati, habati.imte-m2023@fh-salzburg.ac.at

Kejdi Cela, kcela.imte-m2023@fh-salzburg.ac.at

Salzburg University of Applied Sciences, Austria

Abstract

Travel insurance is mentioned as a risk-reduction strategy for travellers, particularly during the pandemic. Therefore, this study aims to evaluate the performance of travel insurance under the effect of the Covid-19 pandemic and investigate the factors influencing purchase decisions. The study also examines participants' preferences for different purchase channels, including traditional and digital channels. This study employed a quantitative approach, collecting primary data from 125 participants through an online survey. IBM SPSS Statistics version 29-2022 was selected for data analysis. The results indicate that (1) even though the Covid-19 pandemic had a significant impact on the purchase of travel insurance during and post-pandemic, its effect on the intention to purchase travel insurance is negligible. (2) Traditional channels, such as insurance providers with personal contact or official insurance companies' websites, remain primary selections due to their authority, credibility, reliability, and human interaction. Conversely, convenience, flexibility, and speed are key motivations for respondents selecting digital channels. These findings highlight the necessity for travel insurance providers to enhance their distribution strategy and optimise their existing channels to align with travellers' expectations.

Keywords: travel insurance; pandemic; COVID-19; distribution channels

1. INTRODUCTION

In recent years, the tourism industry has witnessed significant transformations, influenced by globalisation, technological advancements, and unforeseen global events, such as the COVID-19 pandemic. The pandemic has led to unprecedented increases in risks and uncertainty, posing significant challenges to society (Chen et al., 2023). As travellers are more aware of a variety of risks and uncertainties, such as medical emergencies or flight cancellations, travel insurance has become an essential risk reduction strategy (Leggat et al., 1999).

Demographic factors such as age, income, and education significantly impact in shaping insurance purchasing decisions (Lo et al., 2011). Simultaneously, the digital transformation has significantly shifted the travel industry as well as consumer behaviour, leading to increasing preference for online transactions over traditional channels (World Economic Forum, 2021; Longo, 2024). Nevertheless, there are limited studies exploring the pandemic's influence on travel insurance purchase decisions as well as purchase methods.

This research aims to address the following research questions:

1. What effects has the COVID-19 pandemic had on intentions of purchasing travel insurance?
2. What factors affect travellers' preference when selecting between traditional and digital distribution channels?

By addressing these questions, this research aims to gain deeper insights into the impact of the COVID-19 pandemic on individuals' travel insurance purchasing decisions and examine key factors influencing preferences for traditional versus digital purchasing methods.

Research indicates a marked increase in travel insurance uptake as travellers seek to mitigate the risks associated with potential disruptions caused by the pandemic. A recent study found that the COVID-19 pandemic significantly increased the adoption of travel insurance. Reports indicate that travel insurance premiums rose by approximately 20% to 30%, reflecting heightened consumer awareness and increased demand for coverage during periods of uncertainty (Lim, 2023). Other findings suggest that the COVID-19 pandemic has reshaped travellers' risk perceptions, leading to a higher focus on health and safety. Consequently, travel insurance has become an essential component of travel planning. (Fitriadi et al., 2022; Tan & Caponecchia, 2021). Additionally, the pandemic has catalysed a shift in consumer behaviour, with many individuals prioritising travel insurance to mitigate risks associated with unforeseen events, such as trip cancellations or health emergencies (Mamun et al., 2022; Qian, 2021). This trend is particularly evident among demographics that previously exhibited lower insurance uptake, indicating a broader recognition of the importance of travel insurance in the current climate (Loxton et al., 2020).

Consumer purchasing behaviour for travel insurance through traditional and digital distribution channels varies significantly across different age groups and education levels. However, existing literature suggests that these differences may not be as pronounced as one might expect. For instance, Lo et al. (2011) found that younger travellers (aged 25 or below) and older travellers (aged 65 and above) are generally less likely to purchase travel insurance compared to middleaged groups. It indicates potential uniformity in purchase behaviours across age demographics rather than a distinct divergence based on the distribution channel used. This suggests that age may influence overall purchasing tendencies, but it does not necessarily dictate the selection of distribution channels.

Ulbinaite et al. (2013) suggested that different factors, such as financial, social, psychological, and emotional, heavily influence decisions about insurance coverage purchases. Supporting this line, Yang et al. (2023) highlight that many travellers prioritise pricing over service details when purchasing travel insurance, which implies that the decision-making process is more influenced by financial factors than the distribution channel itself. This trend is aligned with findings from Sarman et al. (2019), who also confirmed that higher education levels are associated with an increased likelihood of purchasing travel insurance, but the distribution channel through which it is obtained remains insignificantly related to this variable.

Furthermore, Choe et al. (2022) suggest that willingness to pay for travel insurance is influenced by health-related risk perception and sociodemographic factors, such as age and education. Their findings indicate that age follows a U-shaped relationship, while education has a positive correlation with willingness to pay. However, the choice of distribution channel does not play a significant role in this dynamic. In addition, the study by Mamun et al. (2022) suggests that attitudes and perceived behavioural controls are significant predictors of travel insurance purchases, indicating that psychological factors may overshadow the influence of distribution channels. This is further reinforced by the work of Yang et al. (2021), which indicates that a substantial portion of travellers lack adequate knowledge about travel insurance, suggesting that education and awareness may be more influential than the distribution channel. Moreover, the literature indicates that the digitisation of travel insurance purchases does not necessarily lead to a significant change in behaviour across different age groups. For instance, while younger consumers may be more inclined to use digital channels, their overall purchasing behaviour remains consistent across age groups, as indicated by the findings of Lim, who discusses the impact of digital tools on insurance purchases but does not find a significant divergence in behaviour based on age or education (Lim, 2023). Studies have shown that the effectiveness of traditional distribution channels, such as travel agencies, remains significant due to their personalised services that can appeal to all age groups, including younger consumers (Aslanzadeh & Keating, 2014). Additionally, the research by Zalech indicates that socio-demographic features, including age, significantly affect risk perception and willingness to purchase TI, implying that younger individuals may not be as inclined towards digital channels as presumed (Zalech, 2020). Moreover, while digital channels are growing, traditional channels still hold substantial influence, particularly among older demographics who may prefer personal interactions and established trust with agents (Aslanzadeh & Keating, 2014). This is supported by findings from Chen et al. (2023), which highlight that traditional distribution methods continue to be effective, even in the face of increasing digitalisation Furthermore, Yang emphasises that price sensitivity often outweighs the appeal of digital convenience, suggesting that young travellers may prioritise cost over the medium of purchase. Chloe et al.'s (2022) findings further this. They demonstrate that risk perception and past experiences significantly influence the willingness to pay for travel insurance, more than their age-related preference for digital channels.

On the other hand, the assertion that higher-educated individuals are more likely to purchase travel insurance through digital channels compared to their lower-educated counterparts is contested by various studies. Research indicates that despite the increasing prevalence of digital channels, many consumers, including those with higher education, still prefer traditional distribution methods due to the perceived reliability and personal interaction offered by agents (Gronflaten, 2009). Additionally, the complexity of insurance products often necessitates...