Travel insurance, once viewed as a small add-on product, is rapidly becoming a testing ground for innovation in the insurance industry. Insurers are using the sector to experiment with new riders and digital features, with the market expected to set new records in contracts this year.
Earlier this year, KB Insurance Co., Ltd. launched an index-type rider for overseas travel. The product pays up to 100,000 Korean won if a departure flight is delayed by more than two hours, with payouts increasing in proportion to the delay time. Unlike traditional policies, which cover only extra costs from delays, the new rider provides fixed compensation once the delay threshold is reached.
This type of product is known as “index insurance.” Instead of assessing actual damage, payouts are triggered automatically when certain conditions are met. For example, climate index insurance can provide compensation if the number of days with extreme temperatures, heavy rain, or record snowfall passes an agreed threshold, regardless of whether a business suspends operations.
Industry experts say index insurance is expected to make increasing use of artificial intelligence (AI) to track and process claims. KB Insurance has been among the first to adopt this approach in travel coverage, signaling how quickly experimental features are entering the mainstream.
Travel insurance is particularly well-suited for such innovation. Policyholders are often younger generations more open to new products, and the structure of travel insurance is relatively simple. Mobile-based enrollment and claims also make it easy for insurers to introduce new riders and test adoption.
With growing demand for travel and rising consumer awareness of risks, the sector is no longer a minor offering. Instead, it is becoming an “insurance laboratory” for the industry—one that is expected to drive both record sales and rapid product evolution.
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