Car Rental Rates ‘Will Start To Level Out’ Soon, Predicts CEO – Forbes

Ernesto Suarez, CEO of Halo Insurance Services, which operates the site
It’s been an up-and-down year for the car rental industry — and for car rental insurance. After two pandemic surges in the United States — and a third one now gathering steam — the auto rental industry is sputtering back to life. But this time it’s different, as car rental insurance takes a more prominent role. I spoke with Ernesto Suarez, CEO of Halo Insurance Services, which operates the site, about how car rental insurance has changed since the pandemic. 
What do you think about the Omicron variant and how it will affect demand for travel in 2022, specifically in rental cars and insurance? 
My gut feeling is that the restrictions that we are seeing now on travel are likely to be reasonably short-lived while people assess how much more transmissible, severe or vaccine resistant Omicron is. 
Also, I think most countries are realizing that it is already in their countries, it’s just that South Africa noticed it first, in which case travel restrictions become less relevant. Israel reported that people who have had a second or third jab within the last six months are still 90% protected and South Africa has said that 87% of cases in hospital now are unvaccinated, so that looks generally good for fewer travel restrictions on fully vaccinated travelers in 2022, at least between developed nations. 
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But travelers seem a little hesitant now, right?
I think one of the biggest concerns is the uncertainty that these knee-jerk restrictions placed on the public. Even if the restrictions are short lived, they have a lasting impact on people’s willingness to make advance travel plans which disrupts the industry and dampens demand. 
A few days before the Omicron variant hit, you told me that you were seeing positive signals that travel has returned in force and that we are very close to pre-pandemic levels. I also interviewed Chrissy Taylor at Enterprise yesterday, who said bookings were way up in 2022. What are the signs you’re seeing? How has that affected the car rental industry?
Have a look at how “book flights” as a search term in the United States trended between November 2019 and November 2021.
Graph of flight booking demand.
More people are searching for “book flights” in November 2021 than they were in November 2020, which is hugely encouraging given that it’s the holiday travel season. Regarding car rental, we’re seeing only 15% fewer users year-to-date than in 2019 – again, it’s very encouraging.
It looks like people still prefer to travel by car during the holiday season in the U.S. Why is that? What’s wrong with flying? And isn’t there a car rental shortage?
People are more aware and wary of personal space and hygiene, and therefore many are choosing to take control of their travel environment and minimize contact with others by traveling by car rather than air, rail or coach.
What’s the deal with electric vehicles? I’m 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. Over a quarter (29%) of participants in a recent survey say they’d rent an electric car to test one out and almost a quarter (23%) said they’d consider renting an electric car “to do their bit” for the environment.  
Some of the car rental prices we’ve seen lately have been a little crazy. When do you expect the vehicle shortage to be over and for things to stabilize? And in your opinion, will we ever go back to the way it was pre-pandemic?
Price inflation isn’t only in reaction to vehicle shortage, but also because some rental companies are probably trying to make hay while the sun shines. Many have been in a difficult situation during the pandemic and, like many of us, will have felt the pinch, so the increase in price is potentially also an effort to reclaim losses in revenue. 
When will it end?
Prices and availability will likely start to level out once the majority of us fall back into our seasonal travel patterns.
I wanted to ask you about insurance. Before the pandemic, travel insurance was optional and less than 20 percent of travelers bought it. Now it’s considered more or less mandatory. Is it the same way with car rental insurance?
Travel insurance queries are definitely on the rise in the States and are at a higher level than what they in the same period in 2019.
It’s hard to say with standalone car rental insurance because many renters have access to some levels of coverage with their automotive insurance and credit cards. However, it stands to reason that any insurance that protects against unforeseen events relating to travel will be viewed more favorably post-pandemic.
Graph of travel insurance searches.
Car rental companies have traditionally made a significant part of their profits from selling insurance. Is that still the case? Are people overpaying when they accept the car rental company’s insurance?
We don’t have any up-to-date figures on U.S. rental companies. The coverage they require often depends on whether the renter is a U.S. or non-U.S. resident and whether they’re hiring domestically or abroad. 
How does a site like disrupt the car rental industry insurance model? 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 any given year. Many rental car insurance benefits attached to auto insurance, travel insurance and credit cards only provide secondary coverage, which can lead to delays in claims being paid out due to subrogation.
How has car rental insurance changed during the pandemic?
We and other like-minded insurance providers made a concerted effort during the pandemic to service customer needs in relation to policy alteration and cancellation, often outside our normal cancellation procedures, because it was the right thing to do. 
What kind of advice would you have for someone renting a car during the holidays? What should they be looking for, in terms of pricing, availability and of course, insurance?
Shop around, book early, review rental company cancellation policies and what insurance is included with the vehicle. If you’re being asked to pay more to waive a deductible, then a standalone car rental insurance policy may be cheaper and more comprehensive than what’s on offer at the rental desk.


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