Medibank Travel Insurance Report
Table of Contents
I. Title page
II. Executive Summary
1. Industry Overview and Product Description
2. Medibank Micro and Macro environment
3. Market Segmentation
4. Market targeting and Consumer Profile
5. Differentiation and Positioning
6. Conclusion and Implications for marketing strategy
The purpose of this report is to present a detailed and accurate analysis of the travel insurance market to enable Medibank to relaunch its travel insurance to be more competitive with established brands.
In order to complete this analysis we have used a wide range of reputable resources including, peer reviewed articles, relevant literature and digital based websites. These resources enabled us to find the information required to completely inform Medibank of the market environment they will be entering.
The following report contains an overview of the travel insurance industry and the relevant products available to consumers. Further analysis also explores the various groups of travel insurance buyers and the specific qualities that make up our consumer profile. Finally with this knowledge, we have made recommendations for Medibank to differentiate and position their product to give the most competitive results.
Section 1 – Industry overview and Product description
The aim of section 1 is to analyse the travel insurance industry, explore its future growth, market share of companies and identify the different insurance products offered to consumers.
The travel insurance industry has had strong growth in the past years indicating it is a very profitable and worthwhile industry to enter. It has been particularly resilient as travel rates have actually increased 6.4% in the 5 year period following the Global financial crisis. There has also been a constant increase in short term resident departures in Australia, 6 million (2005) increase to 9 million (2015.) A short term resident is classed as traveller that has a duration of stay less than one year.
Source http://www.abs.gov.au/ausstats/[email protected]/products/961B6B53B87C130ACA2574030010BD05
According to (IBIS world 2016) the market share of the travel insurance industry is held by 4 major companies Great Lake Australia (46.5%), Allianz Australia (24.5%), Suncorp LTD (7.0%), QBE Insurance Group LTD (6.4%) and Insurance group Australia LTD (4.4%). This is very encouraging for Medibank as their underwriter for their insurance policy is Great Lakes Australia, as they have the biggest travel insurer this will ensure future growth as it is not limited like a smaller company may be.
Insurance as a product aims to protect consumers from unforeseen incidents that may occur while travelling domestically or internationally. Consumers purchase travel insurance are now advised by the Australian Government for their policy to cover these 5 basic avenues of insuring
- protection from theft/loss of luggage
- medical coverage
- cancelation or flight delays
- emergency evacuation
- 24/7 helpline support.
Medibank has a well-established brand name and product in health insurance servicing 3.6 million australians. They class the rest of their products under ‘other insurance.' These include pet, life and travel insurance.
The components of the insurance products vary slightly between these groups to address more specific demographic and psychographic needs.
Growth rate sourced form (IBISworld 2016)
Medibanks travel insurance currently caters for 4 semi-specific groups as shown in the image below;
Section 2 – Medibank Micro and Macro marketing environment
The aim of section 2 is to analyse and identify the environment, both macro and micro, that Medibank will be operating in.
The most relevant factors operating in Medibank's micro environment are competitors, the company, suppliers, intermediaries and customers.
Customers engaging in Medibank insurance product will require a specific and functioning corporate structure. This includes educated sales consultant, consulting officer while before during and after journey and a claims officer. Educated and efficient personal will assist in giving customers the best possible experience.
Financial intermediaries that are important to Medibank are reinsurers. Reinsurers assume some of the risk associated with insurance claims and offer insurance companies the ability to serve more customers with less capital on hand.
While Medibank is the supplier of travel insurance, insurance claims are underwritten (financed) by Great Lakes Australia.
Are the most important micro environment factor. The greater amount of customers medibank can attract the more profitable they will be as a company.
Consumer and business markets
Are incredibly important they serve as identifiers to be analysed on how Medibank can differentiate their product to make it more appealing to customers than competitors.
The most relevant factors operating in Medibank's macro environment are demographic, political, economic and Technological.
Relates to age, sex, race, geographic locations of populations. Population growth has increased in Australia (1.3%) September 14 to 15. Net overseas migration contributed 54% of this population increase
The insurance industry is heavily regulated by Government body APRA (Australian Prudential Regulatory Authority) under the ‘Insurance Act 1973' insurers must obey rules and must offer the provision information (accounting records, claim history) to APRA.
The economic forcese greatly dictate consumer purchasing power and spending patterns. The RBA expects GDP growth to remain steady into the 2016/17 from previous years 2.75-4.25%.
Technological advances can affect medibank in two major ways. Greater ease of smart devices use makes internet researching and purchasing of insurance convenient, customers can get a quote online
Also technological advances that affect consumer's environment, for example new cars now have break and crash detection software, reduces the rate of accidents and hence insurance claims.
Section 3 – Market Segmentation
The aim of section 3 is to identify and categorise travel insurance consumers into specific groups of buyers with commonalities.
- Young adults (18-25)
- Middle aged (30 – 45)
- Baby boomers (50+)
- It is clear to see that demographic trend of travellers remained relatively constant over the 10 year period (2002-12). Therefore it can be seen that the greates target market for travel insurers is middle aged demographic (30-50)
- With regard to young travellers, many would travel with family that would get a family travel insurance policy.
- With regard to older baby boomers, many may choose to travel locally around their country of residence, therefore not shown as departures.
SHORT-TERM RESIDENT DEPARTURES, Australia - Age and Sex
- ‘Thrill seekers' will be doing high risk activities, will pay higher premiums to protect against greater risk
- Backpackers limited luggage but of great importance therefore it is very important their luggage is insured
- Luxury travellers greater amount of luggage, staying at more expensive hotels, expensive flights, timetable orientated, higher insurance for cancellations etc.
- Occasion segmentation
- Important as most consumers will book travel insurance after the trip is booked to, position ads in relevant places
- Psychographic segmentation
- Low – go for the cheapest comprehensive cover
- Average – usually 2nd best option
- High – Greater level of financial protection as more wealthy materials, more money invested in trips than
- Segmentation Criteria Young adventurer The Corporate Family Grey Nomad
Income Low Medium High No income high savings
Age Young adult (18-24) Middle aged (25-35) Adults (36 – 55) Seniors (58-69)
Career lifecycle Not established in an industry or company, odd jobs Established in a particular industry or company
Working the way up the corporate ladder Near or at peak career within the industry or company End of the career and entry into retirement
Can access superannuation
Personality characteristics Young, unsure of purpose, want to experience the world Career orientated and driven Family orientated Couple, children all left home, freedom to travel uninhibited
Travel frequency High travel frequency, want to see as many places as possible High willingness to travel for work, high travel frequency House and family in a specific location, small willingness to travel for work
Odd family vacation
No work commitments, High willingness to travel for extended periods of time
Trip Erratic, impulsive, fast paced Structured, time orientated, goal orientated
Relaxing, low key activities children safe Well planned, safe
Insurance Product demands Cheapest recommended cover
Don't expect outstanding customer service Premium cover, especially flights and luggage protection
Expect superior service ‘to the point' Family cover minded, protection for adults and kids, safety Expect service they can trust and rely on for trip duration
Section 4 – Market targeting and consumer profile
What market segmentation offers the most sustainable profit?
Multi Segmented marketing strategy
In the insurance industry it is important to cater to a wide range of target markets. A lot of insurance recommendations are based on consumers past experience, therefore a young adults Grandparents may have had a great eperiecne with a particular insurance company and will hence recommend their grandson go with them.
Medibanks corporate statement “better health for ALL Australians” implies they have insurance products that can cater for all Australian consumers. This is why it is important that a multi segmented but specific marketing strategy is utilised so Medibanks travel insurance can cater for ALL Australians.
Hence the targeting strategy Medibank should adopt is segmented as this will allow them to target a greater number of customers than a niche strategy. Our consumer profiles are as follows;
Young travellers: These individuals are young age ranging from 18-24, they are not established in a particulare job, working with the purpose of increasing savings to travel. These consumers are looking to purchase the most cost effective travel insurance cover. The financial mentality is more money spent on insurance the less I can spend to enjoy myself while travelling.
Corporate individuals: These individuals are middle aged ranging from 25-35, they are well established in companies or industries, have strong flexibility and willingness to travel for work, particularly interstate. These consumers are looking to purchase accurate and fast insurance, that will generally cover multiple trips throughout the year, convenience instead of buying insurance each trip
Families: This customer target group will tailor to both adults and children. Family consumers are looking for a safe
Old people: This customer target group will tailor to older individuals aged between 58 and 69. Many customers in this generation can access their superannuation close to or on this age, once they can access these financial savings it provides the financial freedom for them to travel. Consumers in this target market are extra cautious they want an ensure policy that will protect their life savings.
Section 5 – Differentiation and positioning
Prices were found by getting online comprehensive quotes from each individual insurance website using identical trip information (Single adult, age 30, international trip. Range of benefits (financial compensation) were compared from each website.
As shown in the table above Medibank is positioned very well in the current market offering one of the cheapest travel insurance products. Their range of benefits comparatively is also reasonably high and remains competitive among some of the biggest companies in the industry.
The most important differentiation actions Medibank need to focus on is the accessibility of their product ,the quality of its service and utilising their established health insurance brand name in the travel insurance industry.
The average travel insurance customer is not an expert in the field. They don't know what the best type of cover is for themselves and their desired trip they expect to be educated and informed from the insurance company, the experts in the industry.
It is Medibanks duty to provide tailored insurance products that have a greater weighting on what each target segment expects from their product. It is recommended Medibank has clear to their target consumer segments, young
As their has been an overall increase in insurance claims it has never been more important to have quality service. It is inevitable that a portion of the customer base will have to make a claim or require assistance. To
Brand loyalty is a large factor in the insurance industry if a customer has a successful experience with one company and one insurance product they will be XX times more likely to purchase a subsequent product from them. Also involved in brand image is trust and reputation, Medibank is Asutralias largest private health insurer 29 percent market share.
Evidence for this map was sourced from a number of customer written reviews from http://www.productreview.com.au/
As is evident via the positioning map there is a huge area of space for medibank to exploit. Raising the level of customer service while keeping their products cheap in relation to competitors will increase consumer satisfaction greatly.
To all walks of life, Medibank travel insurance is the most customer orientated insurance provider on the market. With insurance products tailored specifically to your needs Medibank will be with you every to step of the way to ensure you have a hassle free enjoyable holiday. And if anything does go wrong we will be there to step you through everything blah blah blah.
Moving forward it is important that medibank adopts an aggressive marketing strategy for the travel insurance product. Positioning it with a greater wweughting in their product portfolio. It is also essential that Medibank revises its travel insurance to have categories within the product that are tailored for the specific customer profiles discussed in this report. Finally customer service from purchasing insurance to making a claim has to be reviewed and improved to give the greatest customer satisfaction possible.
- Page 9, medibank revenue pie chart https://www.medibank.com.au/content/dam/medibank/About-Us/pdfs/privatisation/Medibank-Private-Prospectus.pdf
- Page 42 - launched travel insurance
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- Travel Insurance - Compare Quotes For Holiday Insurance Cover | Medibank. 2016. Travel Insurance - Compare Quotes For Holiday Insurance Cover | Medibank. [ONLINE] Available at: http://www.medibank.com.au/travel-insurance/. [Accessed 10 April 2016].
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- Pages - Australian Prudential Regulation Authority . 2016. Pages - Australian Prudential Regulation Authority . [ONLINE] Available at: http://www.apra.gov.au/Pages/default.aspx. [Accessed 10 April 2016].
- Travel Insurance in Australia Market Research | IBISWorld . 2016. Travel Insurance in Australia Market Research | IBISWorld . [ONLINE] Available at: http://www.ibisworld.com.au/industry/travel-insurance.html. [Accessed 10 April 2016].
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