Table of Contents
Executive Summary
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- The market
- A market keeping pace with, but not outgrowing, inflation
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- Figure 1: Forecast of gross written travel insurance premiums – Fan chart, 2014-24
- Uncertain short-term outlook
- Annual travel premiums have risen significantly over the past five years …
- … fuelled by the rising cost of claims
- Over 70 million overseas trips made by UK residents annually
- Regulator proposes new signposting rule for people with medical conditions
- Companies and brands
- Largest underwriters include tifgroup, DLG and MAPFRE
- Significant others
- Tesco Bank and John Lewis Finance withdraw from the market
- Behind the scenes, providers continue to innovate
- The consumer
- Almost two fifths of UK adults are affected by a medical condition, either directly or indirectly
- Just over half of all UK adults went abroad in 2019
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- Figure 2: How long ago last went abroad, by health status, November 2019
- 64% bought a policy especially for their last trip, while 18% already had cover in place
- Those affected by a medical condition are more likely to seek advice from a specialist adviser
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- Figure 3: Sources used to help find travel insurance policy, by health status, November 2019
- Price is the main factor determining product selection
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- Figure 4: Factors influencing policy selection, November 2019
- Many people are ignorant of common policy exclusions
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- Figure 5: Awareness of common travel policy stipulations or exclusions, November 2019
- Many travellers take a paper copy of their travel policy with them
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- Figure 6: Preparations for a holiday or trip abroad, November 2019
- Most don’t check healthcare provision at their destination before they leave
- What we think
Issues and Insights
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- FCA’s new signposting rule will boost the profile of specialist providers
- The facts
- The implications
- Opportunity to grow interest in, and take-up of, supplier failure cover
- The facts
- The implications
The Market – What You Need to Know
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- Market is valued at £803 million in 2019
- Average annual premium rises …
- ... reflecting higher claims costs
- UK residents make over 70 million trips abroad each year
- Regulator intervenes to improve access to travel insurance
Market Size and Forecast
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- Travel insurance market recovers in 2019
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- Figure 7: Total value of travel insurance policies sold, by gross written premium, 2014-19
- Performance varies on an individual provider basis
- Five-year forecast: steady growth ahead
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- Figure 8: Forecast of gross written travel insurance premiums – Fan chart, 2014-24
- Figure 9: Forecast of gross written travel insurance premiums, 2019-24
- Forecast methodology
Market Segmentation
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- Multi-trip policies continue to grow share of sales …
- … but there was reduced demand for both policy types in 2018
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- Figure 10: Segmentation of travel insurance market, by policy type – ABI members only, 2014-18
- Average annual multi-trip premium has risen year-on-year since 2015
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- Figure 11: Average travel insurance premium, by policy type, 2014-18
- Premiums increase with age, correlating with a rising claims bill
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- Figure 12: Average travel insurance premium, by age, 2018
- Figure 13: Average travel insurance premium, average claim value and claims frequency, by age, 2018
Claims Costs Incurred
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- Average travel claim has soared in value over the past five years
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- Figure 14: Total volume and value of travel insurance claims incurred (ABI members only), 2014-18
- Rising medical inflation fuels growth
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- Figure 15: Volume and value of medical expenses claims incurred on travel insurance policies (ABI members only), 2014-18
- Medical expenses account for the largest proportion of claims costs
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- Figure 16: Proportional distribution of travel insurance claims costs, by type of claim, 2018
Market Drivers
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- Number of overseas holidays continues to rise, but business and other trips fall
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- Figure 17: Number of overseas visits by UK residents, by purpose of visit, 2014-19
- UK holidaymakers continue to favour European destinations
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- Figure 18: Number of overseas visits by UK residents, by region of visit, 2014-19
- Nearly two thirds of holidays are arranged independently
- 3% of holidays are for longer durations of 28+ nights
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- Figure 19: Proportional distribution of holiday visits abroad, by length of stay, 2018
- Sustained demand for holidays …
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- Figure 20: Holidays taken in the past 12 months (and destination) and holidays planned to be taken in the next 12 months, November 2019
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- Figure 21: Expectations about taking more, less or the same number of holidays abroad over the coming year compared to the last, November 2019
- … although many are cautious of booking a holiday due to worries about supplier failure
Regulatory and Legislative Changes
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- Future of EHIC scheme post-2020 still to be decided
- Regulator proposes a new rule to help people with pre-existing conditions
Companies and Brands – What You Need to Know
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- Largest suppliers
- Significant others
- Two retail brands exit the market
- New digital entrants drive innovation
- Only a handful of providers invest significant amounts in above-the-line advertising
Underwriter Market Share
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- tifgroup is the largest underwriter …
- … followed by Direct Line Group
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- Figure 22: Largest travel insurance underwriters’ gross written premium, 2017-19
- MAPFRE grew travel premiums by almost a third in 2019
- Significant others
Strategic Developments and Innovation
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- Market manoeuvrings
- Recent contract movements in the affinity sector
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- Figure 23: Leading travel insurance providers and their affinity partners, January 2020
- John Lewis and Tesco Bank withdraw from the market
- Allianz becomes second-largest general insurer after completing two acquisitions
- Markerstudy’s acquisition of CIS General Insurance still to complete
- Launch activity and innovation
- Leading providers continue to work on improving the customer journey
- Pluto and Cuvva: digital start-ups targeting Millennials
- AXA launches online tool for consumers with pre-existing medical conditions
- Bennetts launches worldwide travel policy for bikers
Advertising and Marketing Activity
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- Specialist providers are the biggest investors in above-the-line advertising
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- Figure 24: Top six travel insurance advertisers (above-the-line, online display and direct mail advertising only), 2017-19
- Major insurance brands tend to concentrate advertising on other areas
- TV accounted for nearly a third of total adspend in 2019
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- Figure 25: Proportional distribution of travel insurance adspend (above-the-line, online display and direct mail only), by media type, 2017-19
- Nielsen Ad Intel coverage
The Consumer – What You Need to Know
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- Nearly two fifths of UK adults are affected by a medical condition, either directly or indirectly
- An estimated 24 million UK adults went abroad in 2019
- Most bought a policy especially for their last trip
- Roughly one in five people affected by a medical condition obtained cover via a specialist adviser
- Gaps in consumer knowledge around common policy exclusions
- Pre-travel preparations show reliance on traditional paper documents
Prevalence of Pre-existing Medical Conditions
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- One in five have experienced difficulty getting travel insurance due to a medical condition
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- Figure 26: Proportion of UK adults with a medical condition or health issue that makes it expensive/difficult to get travel insurance or makes it difficult to travel abroad, November 2019
- Pre-existing medical issues are not just an issue for over 55s
Insurance Cover for Last Trip Abroad
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- 71% have travelled abroad within the past three years
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- Figure 27: How long ago last went abroad, November 2019
- Strong correlation between overseas travel and household income
- Medical issues do not make people any less likely to go abroad on holiday
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- Figure 28: How long ago last went abroad, by health status, November 2019
- No improvement in the proportion of uninsured travellers
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- Figure 29: Proportion who bought travel insurance for their last trip abroad, by health status, November 2019
- Product penetration is higher among those affected by a medical condition
- Almost one in five already had cover in place
Channels Used to Select Policy and Influencing Factors
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- Around half used a price comparison site
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- Figure 30: Sources used to help find travel insurance policy, by type of policy, November 2019
- A fifth sought advice or recommendations prior to purchase
- Those with a pre-existing medical condition are more likely to seek advice
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- Figure 31: Sources used to help find travel insurance policy, by health status, November 2019
- Price is the primary consideration
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- Figure 32: Factors influencing policy selection, by type of policy bought, November 2019
- Price comparison website users are more likely to be swayed by Defaqto star ratings
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- Figure 33: Factors influencing policy selection, by sources used, November 2019
- Getting cover is more of a focus for those with medical issues
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- Figure 34: Factors influencing policy selection, by health status, November 2019
Awareness of Common Policy Stipulations and Exclusions
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- Gaps in consumer knowledge are evident
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- Figure 35: Awareness of common travel policy stipulations or exclusions, November 2019
- A third are unaware about exemptions for alcohol-related incidents
- Adults who bought an annual policy in the past year are the most informed
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- Figure 36: Awareness of common travel policy stipulations or exclusions among those who’ve been abroad in past year, by cover status, November 2019
Insurance-related Travel Preparations
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- 56% of adults take a paper copy of their travel policy when they go abroad
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- Figure 37: Preparations for a holiday or trip abroad, November 2019
- Age determines behaviour
- Those with a medical condition are more likely to research healthcare provision
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- Figure 38: Preparations for a holiday or trip abroad, by health status, November 2019
- Only 30% review their travel policy documents in preparation for a trip abroad
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- Figure 39: Preparations for a holiday or trip abroad, by cover status, November 2019
Appendix: Data Sources and Supporting Information
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- Abbreviations
- Key sources
- Consumer research methodology
Appendix: Market Size and Forecast
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- Total market sales forecast – best- and worst-case scenarios
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- Figure 40: Forecast of travel insurance premiums – best- and worst-case scenarios, 2019-24
- Forecast methodology
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