EXCLUSIVE: ‘Up, up and away!’ – Ugo Weyl, Koala in ‘The Insurtech Magazine’
With more than 1,300 scheduled routes cancelled over the four – day bank holiday weekend, airlines and airports struggled to cope with staff shortages as demand spiked from 50 to around 75 per cent of pre-pandemic levels.
Travellers who’d been alerted in advance to changes to their travel plans could count themselves lucky; others were unexpectedly stranded for hours, watching blank departure boards, spending their holiday cash in overpriced airport lounges and wondering if it was worth all the effort. They no doubt also wondered when and if they’d get their money back.
The chaos was a reputational disaster for an industry still in fragile recovery from COVID-19, now also having to deal with soaring fuel costs, recruitment issues, sporadic lockdowns in Asia, and disruption caused by the war in Ukraine. It led some forecasters to extend the date at which they now expect air traffic to return to pre-pandemic levels to the second quarter of 2025 (Bain& Co). Travel insurers have, similarly, had to deal with a rollercoaster two years.
First, they were hit by an avalanche of claims triggered by a global movement ban, putting analogue processes under extreme pressure. That was quickly followed by a shift in public sentiment around travel insurance, many concluding that the comprehensive policies they’d routinely taken in the past and barely looked at, didn’t stand up to scrutiny in this new and unpredictable travel environment. And, perhaps most importantly, the insurance industry as a whole had to figure out ways to work with distributors to inspire public confidence to travel again – or they were all in the soup. Airlines in particular, who had viewed cross – selling insurance simply as a revenue generator, began to see it as a way to add value to their product and get nervous customers, literally, back on board. It was into this maelstrom that Paris – based, B2B insurtech startup Koala stuck a parametric paw.
Launched in 2018 by Ugo Weyl, Léo Tordjman and Antony Mechin, the Koala team had been preparing to release its first product in 2020 – an option for customers to be automatically compensated if their flight is delayed, cancelled or diverted that can be bundled via an API into a travel company’s booking process. True to Koala’s vision for providing travel protection ‘with no exclusions, no proof and compensating travellers as soon a disruption occurs’, it stripped away several layers of complexity to offer an ultimate user experience, which also lowered claims management costs. Its flight disruption and missed connection protection are underpinned by parametric technology.
“When somebody buys a product we live trace the flights associated with it. We know at any point in time whether that specific customer will get the flight. If they get to the airport and have missed the connection they will already have a new ticket in their email,” explains Weyl.
Koala is among a new generation of insurtechs who can’t be neatly categorised. Registered in France as a brokerage, its revenue stream is two – fold: it takes commission as a broker/managing general agent on every insurance policy sold, but, at its core, Koala is a financial solution design company, combining multiple data streams and building machine learning algorithms to create bespoke paperless products with in an automated management process. It puts its ‘techspertise’ at the disposal of others and licences its products and software, working with companies up, down and across the insurance and travel industries. Among its early design and delivery partners were insurance distributor Wakam (formerly known as La Parisienne Assurances), which now markets a leading flight disruption product, and Koala’s reinsurer Swiss Re for whom it helped build a dynamic pricing algorithm that leverages machine learning to predict the cost of any flight in the world being cancelled or missed. But in the spring of 2020, no one was going anywhere and Koala had to think fast on its little feet. “We were lucky because we were small when COVID – 19 hit. It was easier for us to adapt,” recalls Weyl.
And what it came up with was a non – insurance protection product called Flex. Sold to businesses from airlines to hotels, ferry companies to campsites, it gives travellers peace of mind that they can cancel their trip in a single click, with no supporting documents or reason required and get a pre-defined lump sum back in their account instantly. Probably more accurately described as a change – of – mind guarantee or warranty, depending on how it’s marketed, Flex isn’t subject to the restrictions that apply in some regions around who can sell travel insurance and how.
Importantly, in 2020 it gave airlines, who’d been forced into offering value – destroying flexible fares with no cancellation or change fees to encourage passengers to book, an exit strategy when the market started to recover. Flex proved to be the sweetener that would open doors for Koala. “When we were selling it, we had partners saying ‘I’d like to distribute it, but I also need more traditional coverage and I’d prefer not to have two or three providers, so can you source it for me?’,” says Weyl.
In that sense, Koala now also works as an aggregator, able to offer its products alongside more traditional comprehensive medical and repatriation cover for any traveller anywhere in the world. It overcomes the problem travel operators often encounter in finding multiple insurers with licences in different territories to provide cover for every traveller, regard less of where they are to be repatriated to
in the event of an emergency. In February, French travel search engine Kayak launched a digitised travel protection platform, based on Koala tech, offering Flex alongside its Comprehensive insurance, Kayak’s own studies having revealed that about half of French adults were planning to buy travel insurance this year. A quarter of those surveyed, however, didn’t trust insurers; around 40 per cent said policies were unclear and misleading; and just under a third anticipated getting bogged down in any subsequent claims process.
That was followed by a report from Global end – to – end travel experiences and travel medical company Collinson in April, which showed that while 39 per cent of the UK travellers it surveyed were no longer nervous about travel internationally because of changing COVID – 19 guidelines, 38 per cent were and 48 per cent were concerned about losing money because of COVID – related cancellations.
While AXA XL’s senior vice president of global travel recently predicted ‘very strong growth in travel insurance sales’ with a tendency for travellers to ‘over – consume travel assurance and assistance products’ as they sought extra reassurance from operators, John – Lee Saez, director of Kayak Europe clearly saw in Koala ‘a great opportunity to build a new kind of no – nonsense protection’. Kiwi.com an online travel agency has gone a step further by incorporating Koala products into a full guarantee that comes with any booking and gives flexibility to customers to change travel arrangements. It’s this bundling of digital financial services that can be offered alongside more structured, complex insurance products, which Weyl believes will differentiate operators in the long term, and, in the short – term aid the industry’s recovery.
“Embedded insurance has been a feature of the travel industry for while – when you buy a trip you get offered insurance or you pay with a credit card and insurance comes with it. But bundling these other types of financial services has several advantages. When you sell insurance, five to 25 per cent of people will buy your product; when you start bundling, you go to 100 per cent. Everyone is covered and it decreases the price of protection per person. This is where the travel industry is going, if operators realise there’s great value for the end consumer and it works.”
Despite the pent – up demand for travel, 2022 isn’t shaping up to be a great year for the industry with staff shortages predicted to lead to further operating difficulties and soaring costs likely to inflate prices.
Axa’s senior VP of global travel, Erick Morazin, revealed recently that the company had moved from ‘a price negotiation approach to a real mutual understanding of the risks and the definition of a common strategy’ as it helps travel operators, including leading airlines, recover from the attrition of the past two years. Part of that strategy is recognising what the customer really wants – the insurer has signed an agreement with Etihad, for instance, to offer passengers optional customised products based on a traveller’s profile. Partnerships with intrepid technology explorers like Koala are likely to become more common as the industry adapts.
And, if you’re sitting on your suitcase in Terminal 4 at Heathrow at the moment, that’s got to be good news.