Insurance Sales Climb in Wake of Air Crashes : Protection: Mutual of Omaha reports airport revenue is up 12% over 1993. Travelers’ fears cited.
Before Neal Thompson boarded a USAir flight to Memphis on Thursday, he visited a part of the Pittsburgh airport that is becoming more popular: Mutual of Omaha’s insurance desk.
The fatal crash of a USAir jetliner near Pittsburgh in September “was an unfortunate thing, it was just fate,” said Thompson, 71, clutching a $500,000 policy he purchased for $10. “I don’t think anything is going to happen, but this is a cheap investment.”
More travelers agree, which boosted Mutual of Omaha’s airport life insurance sales 12% to $233,000 for September, from the year-earlier $208,000.
Any increase in life insurance sales will probably come at Pittsburgh and other hub airports served by USAir Group Inc., because of perceptions of safety problems at the carrier, said Holly Richmond, vice president of marketing at Tele-Trip, Mutual of Omaha’s travel insurance marketing company. The September disaster was USAir’s second fatal accident this year. On July 2, a USAir jet crashed near Charlotte, N.C.
Safety concerns among travelers could combine with increased Thanksgiving traffic to boost flight insurance sales further at U.S. airports, Richmond said. “We typically see a 10% to 15% increase in sales in the two weeks after a crash,” she said.
A USAir Boeing 737-300 was minutes from landing at Pittsburgh on Sept. 8 when it plunged more than 5,000 feet into a hillside, killing all 132 people aboard. Seven weeks later, the airline industry had another major accident when an AMR Corp. commuter plane crashed outside Chicago on Oct. 31, killing all 68 people aboard.
USAir provided further evidence this week that the September crash lingers in the minds of travelers. The airline placed ads in national publications touting its recent efforts to improve its safety record, such as hiring a former commander in chief of the U.S. Air Forces in Europe to oversee safety.
The insurance boost that followed the crash came as Mutual of Omaha’s airport sales were flagging. The company’s annual sales of flight insurance in airports declined 5% to about $2 million in 1993.
Insurance kiosks, once familiar in most U.S. airports, have largely disappeared, done in by credit card companies such as American Express Co. that automatically provide free insurance to cardholders who charge plane tickets. The flight insurance business has never been all that strong, with many travelers simply choosing to rely on existing life insurance.
Mutual of Omaha kept kiosks at about 30 major airports and vending machines at 60 smaller airports.
“We use it primarily as a service; people expect to find it there,” Richmond said. “It’s an emotional purchase, often based on superstition.” Mutual of Omaha’s in-flight insurance pays up to $500,000 if a policyholder is killed or loses a limb in a plane crash.
The company has made up for the lost flight insurance sales by diversifying its kiosk business to include foreign currency exchange and other financial services.
About 11 million Americans are expected to fly in the nine-day Thanksgiving travel period that began Sunday, up about 5% from 1993, according to the Air Transport Assn. A fear of accidents isn’t likely to keep most Americans off airplanes.
Just ask Jean and Henry Hughes, who arrived at Pittsburgh from Florida on a USAir flight to visit family. Hughes, 63, a retired marine engineer, said he flies USAir most of the time and never buys flight insurance.
“I believe in predestination,” Hughes said as he carried his luggage out of the airport. “Whatever will be, will be.”
Interest in flight insurance isn’t restricted to airport lobbies. Travel agents nationwide said accidents have air travelers asking about crash coverage.
“I’d say I’m getting about 10% to 20% more questions about whether it’s safe to fly or whether they should pay with a credit card to get insurance,” said Kris Schaefer, a travel agent at Travel 1/Carlson Travel Network in Tucson.
