Its travel insurance may face challenges times ahead from Nov 2016 as travelers are becoming more careful on every ringgit spend.
The bulk of Tune Protect’s earnings is derived from the sale of travel insurance via Airasia . Bhd’s flight booking portal. But at a time of economic uncertainties, the demand for travel insurance comes into question.
So they may forego buying insurance. For now (end Nov 2016), demand for travel remains strong despite the economic slowdown and this could be the saving grace for Tune Protect.
Nevertheless the ratio of travel insurance policies sold to Airasia passengers has declined to one five compared with one to four previously. One reason is being the development is the increasing sales of offline tickets.
For example in the China market, a large number of Airasia tickets were sold to groups, which do not buy insurance via online portal. Even in the more established markets like Thailand, the percentage of offline ticket sales has increased in 2016.
Its officials are looking at how it can use offline channels like travel agents to sell its travel products to more customers.
The slower than take up of Tune Protect’s travel insurance also coincides with the change in the default option for insurance when booking flights with the no frills carrier.
Observers opine there has not been much growth in travel insurance policies in 2016.
The travel insurance segment contributes about 70% to Tune Protect’s profits while its non travel general insurance segment accountsThe travel insurance is slowing down, for 30%.
While travel insurance is slowing down, Tune Protect’s non travel general insurance has been seeing growth that is above the industry average of 3%.
With the phased liberalization of motor and fire insurance tariffs in Malaysia, Tune Protect is working hard to ride this trend. It will offer the right insurance and cover to the right price. So usage based insurance is the company looking at. It intends to bank on usage based insurance whereby premium is determined mainly by the amount of time spent or distance travelled on the road.
Nonetheless, industry observers opine this segment requires more capital.
Tune Protect’s foray into Indonesia has not yielded results. Indonesia remains an important market because of the vast potential there.