Table of Contents
Overview
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- What you need to know
- Product definitions and Report coverage
Executive Summary
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- The market
- Looking ahead: steady market growth predicted
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- Figure 1: Forecast of gross written travel insurance premiums – Fan chart, 2011-21
- Annual policies account for the largest proportion of volume sales
- Trends in the holiday market directly influence sales of travel insurance
- Continuing upward pressure on claims costs
- Regulatory developments
- Companies and brands
- Top five underwriters controlled 64% of the market in 2015
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- Figure 2: Market shares of the top five travel insurance underwriters, by premium income, 2015
- There are numerous distributors of travel insurance
- The consumer
- 39% of UK adult internet users have an annual travel policy
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- Figure 3: Ownership of annual travel insurance, by policy type and regional coverage, November 2013 and November 2016
- 82% value the travel insurance element of their current account…
- …although 42% have had to buy additional cover in the past
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- Figure 4: Agreement with statements regarding annual travel policy included with current account, November 2016
- 12% of holidaymakers went abroad uninsured last year
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- Figure 5: Travel insurance arrangements for last holiday abroad, November 2016
- 67% of people used a price comparison site when they bought their last travel policy
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- Figure 6: Usage of price comparison sites during buying process, by type of policy, November 2016
- Travel insurance is sold by a wide range of companies
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- Figure 7: Type of company bought travel policy from, November 2016
- Reasonable level of interest in supplier failure cover
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- Figure 8: Types of cover likely to be interested in when taking next overseas holiday, November 2016
- Consumers are not always honest about their health when buying travel insurance
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- Figure 9: Agreement with statements about pre-existing medical conditions, November 2016
- What we think
Issues and Insights
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- Scope to expand cover for holiday disruption
- The facts
- The implications
- Non-disclosure of pre-existing medical conditions is a significant problem
- The facts
- The implications
The Market – What You Need to Know
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- Market growth is likely to be adversely affected by Brexit
- Annual policies account for the largest proportion of volume sales
- More people taking multiple trips drive growth in the holiday market
- Claims costs continue to rise
Market Size and Forecast
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- The market was worth an estimated £730 million in 2016
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- Figure 10: Estimated value of travel insurance policies sold, by gross written premiums, 2011-16
- Forecast
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- Figure 11: Forecast of gross written travel insurance premiums – Fan chart, 2011-21
- Figure 12: Forecast of gross written travel insurance premiums, 2016-21
- Forecast methodology
Market Segmentation
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- There were over 12 million sales of annual travel policies in 2015
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- Figure 13: Segmentation of travel insurance market, by policy type – ABI members only, 2011-15
- Annual policies tend to be more cost-effective for consumers – providing they make use of them
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- Figure 14: Average travel insurance premium, by policy type, 2011-15
Overseas Travel Trends
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- Number of overseas holidays rises again in 2016…
- …but this is unlikely to be repeated in 2017
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- Figure 15: Number of overseas visits by UK residents, by purpose of visit, 2008-16
- 80% of trips abroad are to European destinations
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- Figure 16: Number of overseas visits by UK residents, by region of visit, 2012-16
- 60% of holidays are arranged independently
- Peak holiday period is July to September
- Most holidays abroad are between four and 13 nights’ duration
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- Figure 17: Number of visits abroad by UK residents (holiday only), by length of stay, 2012-15
Claims Costs and Impact of Brexit
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- Volume of claims may have fallen, but the claims ratio has risen
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- Figure 18: Total volume and value of travel insurance claims incurred, 2011-15
- Medical inflation remains the number one threat to margins
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- Figure 19: Volume and value of medical expenses claims incurred on travel insurance policies, 2011-15
- Medical expenses account for the largest proportion of claims costs
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- Figure 20: Proportional distribution of travel insurance claim costs, by type of claim, 2015
- Brexit impact
- A weaker Pound will push up claims costs and the price of a holiday abroad
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- Figure 21: Sterling to euro and US Dollar exchange rates (average annual and monthly rates), 2011-16
- Future of EHICs in doubt
Regulatory and Legislative Environment
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- New packaged account rules have improved standards…
- …with progress made in regards to checking eligibility for travel insurance
- Most miss-selling complaints are not upheld
Companies and Brands – What You Need to Know
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- Top five underwriters held almost two thirds of the market in 2015
- There are numerous distributors of travel insurance
- Limited above-the-line advertising activity
- Insurance brands suffer from low trust levels and customer loyalty
Market Share
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- AXA is the largest travel underwriter in the UK
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- Figure 22: Leading travel insurance underwriters, by gross written premiums (UK business only), 2013-15
- Significant others
Competitive Strategies
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- Corporate activity
- Recent M&A and rebranding activity
- Distribution partnerships
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- Figure 23: Selected distributors of travel insurance and their administration partners/underwriters, January 2017
- New product launches and industry innovation
- Emerald Life launches travel cover for LGBT community
- Columbus Direct installs self-service insurance kiosks in airports
- Thomas Cook offers policyholders a GP app
- New terrorism protection add-on – Safe Journey
Advertising and Marketing Activity
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- Expenditure on above-the-line advertising accounts for a tiny proportion of total premium income
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- Figure 24: Top ten travel insurance advertisers (above-the line, online display and direct mail advertising only), 2012-16
- One provider accounted for half of all adspend in the latest year
- TV and direct mail represent the largest share of adspend
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- Figure 25: Proportional distribution of travel insurance adspend (above-the line, online display and direct mail only), by media type, 2012-16
- Nielsen Ad Intel coverage
Brand Research
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- What you need to know
- Brand map
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- Figure 26: Attitudes towards and usage of selected brands, December 2016
- Key brand metrics
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- Figure 27: Key metrics for selected brands, December 2016
- Brand attitudes: Insureandgo offers “good value”
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- Figure 28: Attitudes, by brand, December 2016
- Brand personality: Churchill and Virgin Money are among those who have the fun factor
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- Figure 29: Brand personality – Macro image, December 2016
- Aviva and the AA are the most “reliable” brands
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- Figure 30: Brand personality – Micro image, December 2016
- Brand analysis
- Columbus Direct and InsureandGo need to raise brand awareness
- Protectyourbubble.com and Virgin Money are fun and vibrant brands
- Zurich stands alone in exclusivity
- Aviva and the AA are the most competent and reliable
The Consumer – What You Need to Know
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- 39% of UK adult internet users have an annual travel policy
- Most customers value the cover they get with their packaged account
- In the past year, 12% of holidaymakers went abroad uninsured
- Most use a price comparison site and buy online
- Many consumers want supplier failure cover
- Significant minority of adults choose not to disclose a health condition
Ownership of Annual Travel Insurance
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- Two in five adults have an annual travel policy
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- Figure 31: Ownership of annual travel insurance, by policy type and regional coverage, November 2013 and November 2016
- Men are more likely to have annual cover than women
- 25-34-year-olds are a key target group for packaged account cover
Packaged Account Policyholders – Experiences and Attitudes
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- 82% value the travel insurance included in their packaged account…
- …but 42% have had to buy additional cover
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- Figure 32: Agreement with statements regarding annual travel policy included with current account, November 2016
Insurance Arranged for Last Holiday Abroad
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- 44% of UK adult internet users went on holiday abroad in the past year
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- Figure 33: Holidays taken within the past 12 months, November 2016
- Over the past year, 12% went on holiday without insurance
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- Figure 34: Travel insurance arrangements for last holiday abroad, November 2016
Channels Used to Buy Cover
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- Price comparison sites play a hugely influential role in this market
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- Figure 35: Usage of price comparison sites during buying process, by type of policy, November 2016
- Numerous distributors create a very competitive marketplace
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- Figure 36: Type of company bought travel policy from, by type of policy, November 2016
- Price comparison websites help to drive direct sales of travel insurance
- A significant minority of travel policies are still arranged offline
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- Figure 37: Method of buying travel policy, by type of policy, November 2016
Cover Types Interested In
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- Significant consumer interest in supplier failure insurance
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- Figure 38: Types of cover expected to be most interested in when taking next overseas holiday – Total sample versus those who took an overseas holiday in the past year, November 2016
- Many consumers are also keen on having disruption cover
- 58% of the over-65s are interested in cover aimed at older consumers
- Other cover types are more niche
Pre-existing Medical Conditions – Experiences and Attitudes
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- 35% have some type of pre-existing medical condition
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- Figure 39: Agreement with statements about pre-existing medical conditions, November 2016
- Significant minority have had trouble getting cover for a pre-existing condition
- 19% of annual policyholders would not inform their insurer if they developed a health condition
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- Figure 40: Agreement with statement about pre-existing medical conditions – Annual policyholders only, November 2016
Appendix – Data Sources, Abbreviations 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 41: Forecast travel insurance gross written premiums – Best- and worst-case scenarios, 2016-21
- Forecast methodology
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