Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Offering superior value when times are tight
- Adapting to changing holiday trends
- Trust is crucial in the current environment
- Arranging cover direct to save money
Market in Brief
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- Overseas holidays expected to decline in the current climate…
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- Figure 1: Domestic vs overseas holidays, 2003-08
- …which clearly threatens travel insurance companies
- Few competing products exist
- The market suffered in 2008
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- Figure 2: Volume and value of UK travel insurance policies written, by type, 2004-08
- AXA leads the field
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- Figure 3: Top ten travel insurance providers (parent companies), by GWP, 2007
- Advertising expenditure has been increasing
- More people are using aggregators to arrange cover
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- Figure 4: Methods of arranging travel insurance, 2006-08
- ABs are more likely to take out an annual policy
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- Figure 5: Travel insurance ownership, by type of policy, December 2008
Internal Market Environment
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- Key points
- Big regulatory changes come into effect in 2009
- Growth in the number of overseas holidays is good for providers
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- Figure 6: Domestic vs overseas holidays, 2003-08
- Other trends that may affect demand for travel insurance
- Important considerations for providers in 2009
- The new threats of terrorism and airlines going bust
- Exaggerated travel insurance claims force premiums up
- Aggregators encourage price competition
- Inadequate cover and accusations of mis-selling?
Broader Market Environment
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- Key points
- People are concerned about the economy…
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- Figure 7: Changing consumer concerns, 2008-09
- …prompting consumers to cut back…
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- Figure 8: Spending cutbacks over the past six months, December 2008
- …which is not good news for travel insurance providers
- The falling pound may put people off taking holidays abroad
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- Figure 9: Spot exchange rates, US dollar and euro into £ Sterling, Jan 2007-Dec 2008
- Over the long term, wealth and affluence have grown…
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- Figure 10: UK adult population splits, by socio-economic group, 2002-12
- …but changing population dynamics may affect insurers
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- Figure 11: UK population splits, by lifestage, 2002-12
Competitive Context
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- Key points
- The European Health Insurance Card
- Packaged current accounts that include travel insurance
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- Figure 12: Appeal of added-value benfits included in packaged current accounts, April 2008
- Taking a risk
Strengths and Weaknesses in the Market
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- Market strengths
- Seen as a must-have by many people
- Cover is relatively inexpensive
- An annual holiday has become the norm for most
- Increased risks while travelling abroad may boost uptake
- Market weaknesses
- The perception that insurers do not pay out
- Decline in overseas holiday-taking
- People may skip travel insurance to save money
- More people sourcing cover themselves
Who’s Innovating?
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- Key points
- How about offering free insurance?
- Additional online tools for customers
- Adapting to changes in the market
- Promoting strength and stability
- Giving consumers more choice and flexibility
Trade Perspective
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- The impact of the economic downturn
- The weak pound may be more of an issue
- Boosting uptake of travel insurance
- Rising claim costs
- FSA regulation
- Other challenges in the market
Market Size and Forecast
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- Key points
- Travel insurance accounts for a small part of the market
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- Figure 13: Share of total premium income (UK business), by general insurance sector, 2007
- The number of policies written will decline slightly in 2008
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- Figure 14: Volume and value of UK travel insurance policies written, by type, 2004-08
- Travel insurance claims continue to increase
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- Figure 15: Travel insurance claims incurred, by volume and value, 2004-07
- Market forecast
- 2009 is going to be a tough year for providers…
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- Figure 16: Forecast volume and value of UK travel insurance policies written, by type, 2004-13
- …but the market should have made a full recovery by 2011
- Factors used in the forecast
Market Share
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- Key points
- AXA is the market leader in travel insurance…
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- Figure 17: Top ten travel insurance providers (parent companies), by GWP, 2007
- …having increased its revenue significantly in 2007
Companies and Products
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- Recent developments in the market
- AXA
- Aviva (Norwich Union)
- RBS Insurance
- Fortis
- AIG
Brand Elements
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- Brand map
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- Figure 18: Attitudes and usage of various travel insurance brands, January 2009
- Columbus Direct
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 19: Attitudes towards the Columbus Direct brand, January 2009
- Direct Line
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 20: Attitudes towards the Direct Line brand, January 2009
- Norwich Union
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 21: Attitudes towards the Norwich Union brand, January 2009
- Post Office
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 22: Attitudes towards the Post Office brand, January 2009
- Thomas Cook
- What the brand is trying to achieve
- What the consumer thinks
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- Figure 23: Attitudes towards the Thomas Cook brand, January 2009
- Brand Qualities of travel insurance brands
- The Post Office is very endearing
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- Figure 24: Personality of various travel insurance brands, January 2009
- Travel agents are not people’s first choice for travel insurance
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- Figure 25: Commitment to various travel insurance brands, January 2009
- A lot of people have never heard of Columbus Direct…
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- Figure 26: Consumer usage of various travel insurance brands, January 2009
- …but might consider them if they knew more about them
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- Figure 27: Intentions towards various travel insurance brands, January 2009
- The Post Office is thought to be gaining ground
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- Figure 28: Momentum of various travel insurance brands, January 2009
- First Choice could improve on customer service
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- Figure 29: Satisfaction with various travel insurance brands, January 2009
- Halifax scores lowest for stand-alone cover
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- Figure 30: Motivation towards various travel insurance brands, January 2009
- Round up
Brand Communication and Promotion
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- Key points
- Travel insurance adspend is down slightly in 2007/08
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- Figure 31: Top ten categories of general insurance advertising, 2004/05-2007/08
- Columbus Direct has really stepped up its advertising
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- Figure 32: Top 20 companies advertising travel insurance, 2004/05-2007/08
- Direct mail is the most popular type of media used
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- Figure 33: Media types used for advertsing travel insurance, 2004/05-2007/08
- A seasonal product with advertising peaking in summer
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- Figure 34: Advertising expenditure on travel insurance, by month, 2007
Channels to Market
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- Key points
- More people using aggregators to source travel insurance
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- Figure 35: Methods of arranging travel insurance, 2006-08
- Cover arranged through banks has also increased
- Convenience and price are merging
The Consumer – Travel Trends and Product Ownership
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- Key points
- Half of consumers have not been abroad in the last year
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- Figure 36: Leisure travel trends, by destination, December 2008
- Few holidaymakers risk going abroad without travel insurance
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- Figure 37: Travel insurance ownership, by type of policy, December 2008
- Single-trip policies are still the most popular
- Men and young people are more likely to forego cover
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- Figure 38: Travel insurance ownership, by gender, age, marital status, lifestage and household tenure, December 2008
- Married people more likely to have an annual policy
- ABs are most likely to take out an annual policy
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- Figure 39: Travel insurance ownership, by socio-economic group, December 2008
- Most people arrange their travel insurance direct with a provider…
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- Figure 40: Methods of arranging travel insurance, December 2008
- …though price comparison websites are also very popular
- BMRB data suggest that the telephone still rules
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- Figure 41: Methods of arranging travel insurance, June 2008
- Price comparison sites are not for the older consumer
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- Figure 42: Methods of arranging travel insurance, by demographic sub-group, December 2008
- Apathetic C2DEs more likely to arrange cover through a travel agent
- Annual policies are more suited to direct sales
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- Figure 43: Travel insurance ownership, by method of arranging cover, December 2008
- Banks could do better in the single-trip market
The Consumer – Attitudes towards Travel Insurance
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- Key points
- Travel insurance – the product that sells itself
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- Figure 44: Attitudes towards travel insurance, December 2008
- Travel insurance is most highly valued for medical cover
- Older people are more likely to take out travel insurance
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- Figure 45: Attitudes towards travel insurance, by age, December 2008
- ABs are likely to take out cover…but are highly price-sensitive
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- Figure 46: Attitudes towards travel insurance, by gender, age, socio-economic group, marital status and region, December 2008
- People with cover already in place are less concerned by price
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- Figure 47: Attitudes towards travel insurance, by type of policy purchased, December 2008
- Existing policyholders may be travel insurance advocates
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- Figure 48: Type of policy purchased, by attitudes towards travel insurance, December 2008
- Single-trip policyholders less likely to shop around
- Savvy consumers buy online and use price comparison sites
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- Figure 49: Attitudes towards travel insurance, by channel of arrangement, December 2008
- Many still don’t think it’s worth shopping around for travel insurance
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- Figure 50: Attitudes towards travel insurance, by attitudes towards travel insurance, December 2008
The Consumer – Further Analysis
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- Key points
- People visiting friends or family less likely to take out insurance
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- Figure 51: Travel insurance ownership, by destination visited, January 2009
- Long-haul holidaymakers more likely to take out an annual policy
- Frequent travellers more likely to take out an annual policy
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- Figure 52: Travel insurance ownership, by frequency and duration of overseas trips, January 2009
- Travel insurance target groups
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- Figure 53: Travel insurance target groups, January 2009
- Group 1: No Need (Out of Market)
- Group 2: Apathetic Risk Takers
- Group 3: Price Sensitive
- Group 4: Strong advocates
- Strong Advocates are the ideal customer
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- Figure 54: Travel insurance target groups, by attitudes towards travel insurance, January 2009
- Price Sensitive consumers are likely to use aggregators
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- Figure 55: Travel insurance target groups, by method of arranging cover, January 2009
- Price Sensitive consumers are more frequent travellers
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- Figure 56: Travel insurance target groups, by frequency and duration of overseas trips, January 2009
- Apathetic Risk Takers are most likely to forego cover
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- Figure 57: Travel insurance target groups, by type of policy purchased, January 2009
Appendix
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- Figure 58: Travel insurance ownership, by demographic sub-group, December 2008
- Figure 59: Methods of arranging travel insurance, by demographic sub-group, December 2008, (Table 1 of 2)
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- Figure 60: Methods of arranging travel insurance, by demographic sub-group, December 2008, (Table 2 of 2)
- Figure 61: Attitudes towards travel insurance, by demographic sub-group, December 2008, (Table 1 of 2)
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- Figure 62: Attitudes towards travel insurance, by demographic sub-group, December 2008, (Table 2 of 2)
- Figure 63: Travel insurance target groups, by sub-demographics, January 2009
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