How Travel Insurance is Going Green with the Help of Flotilla

What does sustainable travel mean?

The term sustainable travel is explained by The World Tourism Organisation as “tourism that takes full account of its current and future economic, social and environmental impacts, addressing the needs of visitors, the industry, the environment and host communities”.

Put simply, sustainable travel means travelling responsibly, thinking about the long-term and short-term needs of the area you’re visiting.

Growing demand

Demand is a key part of the puzzle for travel insurers looking to move into sustainability practices and policies. The sustainable international tourism industry worldwide is expected to grow to $374.2bn (£297.9bn) by 2028 up from an estimated $172.4bn (£137.2bn).

A recent survey conducted by booking.com revealed 74% of travellers in 2023 wanted travel companies to offer more sustainable travel choices, up from 66% in 2022.

A commitment to ethical travel is especially pronounced among millennials, 90% of whom consider a travel company’s commitment to ethical travel important when booking a trip, according to separate research.

According to a survey by Flotilla’s client InsureandGo, 55% of travellers try to take some practical steps towards doing a bit to help the planet when booking a holiday. “For us, this is an important group to focus on, where the most meaningful changes are most likely to come from,” says InsureandGo’s Nelson.

“Encouraging these individuals in their holiday choices – from the destination and mode of travel, to how and what they pack – could potentially make a significant difference, if approached correctly. The key is to keep everyone engaged in the journey, maintain their trust, and avoid alienating anyone,” he adds.

The emerging Gen Z demographic is poised to reshape the market – a generation that happens to resonate with World Nomads in that its policyholders are primarily young and adventurous travellers.

With an inclination towards authenticity and ethical consumption, Gen Z travellers are increasingly influential, driven by a desire for travel experiences that reflect their values.

Jonathan Frankham, general manager for World Nomads UK & Europe, says: “We are of the strong option that as Gen Z matures and their economic influence expands, their preference for companies that prioritise sustainability will significantly impact the travel insurance sector.”

“It underscores the need for businesses to integrate sustainable practices and strive for net-zero emissions, not just as an ethical must but as a strategic business advantage.”

An indicator of World Nomads’ consumers’ commitment sustainability efforts is the company’s Footprints programme.

So far 1.3 million travellers have donated nearly $4m (£3.18m) to 256 projects worldwide as part of their policy purchase, spanning education programmes for children affected by conflict to environmental conservation efforts such as sea turtle conservation.

“At World Nomads, we recognise that sustainability is the defining challenge of our age,” says Frankham. “By aligning our offerings with the expectations of younger and more environmentally conscious travellers, we not only contribute to the greater good but also enhance our brand’s relevance and resilience in a competitive marketplace.”

Limited rollout

However, the ability to ‘reward’ customers who choose to travel sustainably is not something that is prevalent in the insurance market yet.

Alastair Crossley, global head of travel solutions at Axa Partners, says given the high levels of regulation and risk that govern the industry “it is not straightforward to offer financial incentives such as discounts and reductions for sustainable travel choices, unless we can demonstrate to regulators that those choices have a direct impact on risk.”

Despite travel insurers’ varied efforts, the nature of its industry and the contribution of travel and tourism to GHGs opens the sector up to accusations of trying to greenwash what remains a fundamentally unsustainable activity, albeit millions of people every year want to take part in order to see the world and visit loved ones.

Greenwashing primarily involves misleading customers. It creates a false impression that may paint a positive picture in the short term, but ultimately, it will undermine trust, which can be nearly impossible to rebuild. This scepticism can also extend to other companies within the industry, damaging the reputation of genuinely sustainable businesses.

InsureandGo’s Nelson says the key to avoiding accusations of greenwashing is to understand the views of customers, to get a better sense about action they want to see and “ensuring that what we do is both authentic and suitably ambitious”.

“We don’t do sustainability in isolation as a corporate strategy – we invest time and resources to understand where consumers are on sustainability, to help us better understand the opportunities and challenges in having holidays sustainably,” says Nelson. This involves listening to consumers, acting on what they say and sharing consumer research knowledge publicly to raise consumer awareness on what can be done together.

From InsureandGo’s data, people are increasingly aware of sustainability, and want to see the companies they choose taking meaningful steps. For example three-quarters (75%) of holidaymakers polled by InsureandGo would be more likely to choose a company that has a strong reputation for supporting sustainable travel.

But to bring everyone along on the journey, not just the ‘converted’, is not without its challenges. “We need to understand where consumers stand on this issue, and help them with the next steps, whatever they might be,” says Nelson.

“So much depends upon trust, confidence and support. Undoubtedly, sustainability is one of the biggest challenges we face in the coming years, and one we are taking extremely seriously.”

To learn more about how your business can achieve net zero get in touch with one of our climate experts for a personalised tour of our platform.

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