Travel Insurance - UK - February 2020

OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
A market keeping pace with, but not outgrowing, inflation
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
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
Figure 3: Sources used to help find travel insurance policy, by health status, November 2019
Price is the main factor determining product selection
Figure 4: Factors influencing policy selection, November 2019
Many people are ignorant of common policy exclusions
Figure 5: Awareness of common travel policy stipulations or exclusions, November 2019
Many travellers take a paper copy of their travel policy with them
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
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
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
Travel insurance market recovers in 2019
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
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
Multi-trip policies continue to grow share of sales …
… but there was reduced demand for both policy types in 2018
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
Figure 11: Average travel insurance premium, by policy type, 2014-18
Premiums increase with age, correlating with a rising claims bill
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
Average travel claim has soared in value over the past five years
Figure 14: Total volume and value of travel insurance claims incurred (ABI members only), 2014-18
Rising medical inflation fuels growth
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
Figure 16: Proportional distribution of travel insurance claims costs, by type of claim, 2018
MARKET DRIVERS 
Number of overseas holidays continues to rise, but business and other trips fall
Figure 17: Number of overseas visits by UK residents, by purpose of visit, 2014-19
UK holidaymakers continue to favour European destinations
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
Figure 19: Proportional distribution of holiday visits abroad, by length of stay, 2018
Sustained demand for holidays …
Figure 20: Holidays taken in the past 12 months (and destination) and holidays planned to be taken in the next 12 months, November 2019
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
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
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
tifgroup is the largest underwriter …
… followed by Direct Line Group
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
 MARKET MANOEUVRINGS
Recent contract movements in the affinity sector
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
Specialist providers are the biggest investors in above-the-line advertising
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
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
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 
One in five have experienced difficulty getting travel insurance due to a medical condition
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 
71% have travelled abroad within the past three years
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
Figure 28: How long ago last went abroad, by health status, November 2019
No improvement in the proportion of uninsured travellers
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
Around half used a price comparison site
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
Figure 31: Sources used to help find travel insurance policy, by health status, November 2019
Price is the primary consideration
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
Figure 33: Factors influencing policy selection, by sources used, November 2019
Getting cover is more of a focus for those with medical issues
Figure 34: Factors influencing policy selection, by health status, November 2019
AWARENESS OF COMMON POLICY STIPULATIONS AND EXCLUSIONS
Gaps in consumer knowledge are evident
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
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
56% of adults take a paper copy of their travel policy when they go abroad
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
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
Figure 39: Preparations for a holiday or trip abroad, by cover status, November 2019
APPENDIX: DATA SOURCES AND SUPPORTING INFORMATION
Abbreviations
Key sources
Consumer research methodology
APPENDIX: MARKET SIZE AND FORECAST
Total market sales forecast – best- and worst-case scenarios
Figure 40: Forecast of travel insurance premiums – best- and worst-case scenarios, 2019-24
Forecast methodology