"New entrants - such as Boots, Tesco and the Post Office - are gradually changing consumer perceptions about buying travel insurance."

Extract from this report

Travel insurance has become an increasingly competitive market over the last five years, reflecting the general trend in other personal lines insurance sectors. In 1999, UK residents took nearly 54 million trips overseas, and the UK travel insurance market is estimated to reach a market value of £555 million by the end of this year. The extent and character of the travel insurance market is inherently and strategically linked to travel and holiday patterns, and as consumers undertake increasingly adventurous activities in a wider range of destinations, providers have needed to become innovative both in the type of products they are offering and in the marketing of these products. The growth in the city breaks, winter sports and long-haul holidays has in fact allowed for a more imaginative product offering and market segmentation, with multi-layered policies being developed for specific groups of travellers. Fuelled by an increase in advertising expenditure, and with many new entrants seeking to undercut existing providers and thus forcing down premium rates, insurance companies are needing to cater very specifically for their customers. UK consumers are now far more discerning than they have been in the past, and will often take on the responsibility of finding their own policy as opposed to simply buying direct from the travel agent. Like many other industries and the whole of the financial services sector, service is becoming key in giving customers exactly what they want. The 1998 MMC ruling prevented the linking of discounted holidays to insurance packages, leading to alternative marketing opportunities for direct providers and diminishing the point-of-sale advantage. Can the travel agent regain its hold on the insurance market or will new methods and media begin to dominate?

· Consumers are now far more likely to research their travel insurance rather than take the first policy offered to them.

· With increased price competition, providers are needing to cater very specifically for their customers' travel needs.

· With new regulations governing the market, will financial providers find direct routes to the customer away from the travel agent?

The travel insurance industry reflects the wider insurance market in recognising the potential of e-commerce, with most insurers having some form of online presence. However these often function only as a marketing tool, with little scope for carrying out other transactions. With digital television offering insurance intermediaries another means of targeting potential travel insurance customers, there are still substantial opportunities for providers to develop and enlarge this market. This report looks at the market for personal travel insurance and assesses the battle between traditional insurers and the direct-sell providers. Travel Insurance analyses consumer attitudes towards taking out travel insurance, annual policies and shopping around for the most economical cover and examines developing areas of the travel insurance market.

Other Mintel reports of relevance to this market include:

- City Breaks, Leisure Intelligence, February 2000

- Special Report, Holidays, January 2000

- Travel Agents, Retail Intelligence, January 2000

- Pet Insurance, Financial, December 1999

and the forthcoming:

- Independent Travel, Leisure Intelligence, April 2000.