Car rental rates “will start to stabilize” soon, CEO says


It has been a turbulent year for the rental car industry and for rental car insurance. After two pandemic outbreaks in the United States – and a third gaining momentum – the car rental industry is coming back to life. But this time it’s different, as car rental insurance takes on more importance. I spoke with Ernesto Suarez, CEO of Halo Insurance Services, which operates the site, about how rental car insurance has changed since the pandemic.

What do you think of the Omicron variant and how it will affect travel demand in 2022, especially in rental cars and insurance?

My hunch is that the restrictions we’re seeing on travel now are likely to be short-lived as people assess how more transmissible, severe, or vaccine-resistant Omicron is.

Also, I think most countries realize it’s already in their country, it’s just South Africa noticed it first, in which case the travel restrictions become less relevant. Israel has reported that people who have had a second or third vaccine in the past six months are still 90% protected and South Africa said 87% of hospitalized cases are now unvaccinated, which appears generally good for fewer travel restrictions for fully vaccinated people. travelers in 2022, at least between developed countries.

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But travelers seem a little hesitant now, don’t they?

I think one of the biggest concerns is the uncertainty that these instinctive restrictions placed on the public. Even though the restrictions are short-lived, they have a lasting impact on people’s willingness to plan their trips in advance, disrupting the industry and dampening demand.

A few days before the Omicron variant hit, you told me you were seeing positive signals that travel was back in force and we were very close to pre-pandemic levels. me too interviewed Chrissy Taylor at Enterprise yesterday who said bookings are up in 2022. What signs are you seeing? How has this affected the car rental industry?

Take a look at the trend of ‘book flights’ as a search term in the US between November 2019 and November 2021.

More people are looking for “flight bookings” in November 2021 than they were in November 2020, which is extremely encouraging given that it is the season for vacation travel. When it comes to car rental, we only see 15% fewer users since the start of the year compared to 2019 – again, this is very encouraging.

It seems that people still prefer to travel by car during the vacation season in the United States. Why ? What’s wrong with theft? And isn’t there a shortage of car rentals?

People are more aware and wary of personal space and hygiene, and therefore many choose to take control of their travel environment and minimize contact with others by traveling by car rather than by plane, by car. train or coach.

What’s the deal with electric vehicles? I am thinking of the big Hertz announcement with Tesla. Is this just a passing fad or will your next car rental be electric?

I would say it’s a trend. More than a quarter (29%) of participants in a recent survey said they would rent an electric car to test drive one and almost a quarter (23%) said they would consider renting an electric car ” to do their part ”for the environment.

Some of the car rental prices we’ve seen recently have been a bit crazy. When do you think the vehicle shortage will be over and things will stabilize? And in your opinion, will we ever return to the situation before the pandemic?

Price inflation is not just a reaction to the shortage of vehicles, but also because some rental companies are probably trying to make hay while the sun is shining. Many have been in a difficult situation during the pandemic and, like many of us, will have felt the pinch, so the increase in prices is potentially an effort to recoup lost income as well.

When will this end?

Prices and availability will likely start to stabilize once the majority of us fall back into our seasonal travel habits.

I wanted to ask you a question about insurance. Before the pandemic, travel insurance was optional and less than 20% of travelers bought it. Now it’s considered more or less mandatory. Is the same with rental car insurance?

Travel insurance claims are definitely on the rise in the United States and are at a higher level than they were at the same time in 2019.

It’s hard to say with self-contained car rental insurance, as many renters have access to certain levels of coverage with their auto insurance and credit cards. However, it stands to reason that any insurance that protects against unforeseen travel-related events will be viewed more favorably after the pandemic.

Car rental companies have traditionally made a significant portion of their profits by selling insurance. Is this still the case? Are people paying too much when they take insurance from the car rental company?

We do not have up-to-date figures on US rental companies. The coverage they need often depends on whether the renter is a US resident or non-US and whether they are hiring within the country or overseas.

How is a site like disrupting the insurance model of the rental car industry? How do travelers benefit?

We provide primary standalone rental car protection that can be used for a single car rental or multiple car rentals throughout a given year. Many rental car insurance benefits related to auto insurance, travel insurance, and credit cards provide only secondary coverage, which can lead to delays in settling claims due to a subrogation.

How has car rental insurance changed during the pandemic?

We and other like-minded insurers made a concerted effort during the pandemic to meet clients’ needs for policy modification and cancellation, often outside of our normal cancellation procedures, as it was the right thing to do.

What kind of advice would you have for someone renting a car while on vacation? What should they look for in terms of price, availability and of course insurance?

Shop around, book early, review rental companies’ cancellation policies and what insurance is included with the vehicle. If you are asked to pay more to waive a deductible, then a self-driving car rental insurance policy may be cheaper and more comprehensive than what is offered at the rental desk.

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