The insurer and the online travel booking site came to a deal to provide consumers with more options.
American Insurance Group and Expedia have reached a deal that will sell AIG travel insurance on the popular website. On the insurance company’s side, the agreement was a part of a broader strategy. CEO Brian Duperreault is seeking to broaden the insurer’s each and grow its size.
This new partnership with Expedia is actually the insurer’s second travel insurance deal five months.
Two AIG travel insurance deals have been reached in under half a year. Aside from the most recent deal with Expedia, the insurance company also partnered with United Airlines. AIG announced its United Airlines deal in October 2017. That contract allows the insurer to sell travel insurance policies to United Airlines customers. As of yet, the specific terms of that agreement have not been revealed.
AIG announced its intentions to purchase Validus Holdings Ltd in January. That purchase was for $5.56 billion in cash. This brought a span of cutbacks and belt tightening to a close. AIG Insurance had been keeping costs to a minimum. This was a part of its strategy following the 2008 financial crisis, which was nearly fatal to the insurer. Since that time, AIG has considerably reduced in size.
AIG travel insurance allows the insurer to broaden its reach within a relatively low-risk business.
The insurance industry typically sees travel insurance as a great way to keep up a steady revenue without taking on considerable risk. However, insurance companies that want to use their travel business to growth their bottom line must think large-scale. Insurers need to think in very large terms for travel insurance revenue to be worthwhile, said Paul Newsome, analyst for Sandler O’Neill.
“It’s almost certainly not a material change, but it’s a really nice feather in (AIG’s) cap,” explained Newsome while discussing the Expedia deal. “It’s nice to have a high-profile transaction that maybe adds some confidence to people looking at AIG.”
The most recent AIG travel insurance agreement makes it possible for American Expedia customers to purchase coverage. Travelers purchasing flights, booking hotels, or buying vacation packages and cruises on all Expedia sites can buy the policies. The websites include Expedial.com, Orbitz, Travelocity and Cheaptickets. The offering will eventually roll out worldwide.