Travel insurance providers are reaping the benefits of global travel chaos, with a surge in policy sales putting the industry on track for significant growth. Jenny Southan reports
The Covid-19 crisis has raised awareness of the benefits of travel insurance among consumers and providers are cashing in.
In 2020, the global travel insurance market was estimated to be worth US$21.5 billion but it is projected to reach US$33.7 billion by 2027, growing at an annual rate of 6.7 per cent over the next five years.
An emerging trend, the need for travel protection will accelerate travel insurance growth.
As additional destinations open up to tourism, more countries are expected to require travel insurance for entry, which should influence the travel insurance conversion rate. Allianz Partners foresees conversion rates remaining elevated throughout 2021 and probably the most part of 2022, as the pandemic continues to be top of mind for people around the world.
Rachel Temperton, head of travel and tourism at Allianz Partners UK, says: “As the industry begins to recover, we are closely monitoring consumers’ preferences when it comes to travel and travel insurance to ensure that our products meet the requirements of our clients and customers. With many still uncertain, our protection solutions can offer peace of mind and reassurance as travellers set off on their holidays.”
According to Allianz Partners’ data, the recovery of leisure travel bookings from its business partners is currently driving higher insurance purchases compared to 2019. The travel insurance market is outperforming the whole travel industry, not just in the UK, but also in North America and elsewhere in Europe.
Other in travel insurance trends that Allianz Partners predicts include…
- New purchase habits reflect the need for a seamless digital experience
- New expectations show preference for flexible and comprehensive trip protection
Although COVID-19 has been the most wide-reaching travel crisis in history, the global economy is already back above pre-crisis output, as some markets have started to see gradual domestic travel recovery, showing positive signals.
The new emerging travel customer is increasingly cost conscious and a digital native, familiar with using digital solutions and technology.
The new traveller is looking for flexibility as well as a seamless experience based on transparency and trust. Technology is also boosting travel confidence, with over four in five travellers saying that technology would increase their confidence to travel in the next 12 months.
With the UK restrictions being lifted at a different pace compared to other countries and government advice for travel abroad subject to change at short notice, staycations have catapulted to a whole new level, a trend that should remain solid as the world exits a four-year downturn in 2025.
Millennials are leading this trend globally as well as in the UK, with 45 per cent of Millennials taking two staycations in 2021, compared with 43 per cent of Gen Z and 31 per cent of GenX.
According to Allianz Partners’ Customer Lab research, Millennials are also becoming increasingly interested in travel insurance since the Covid-19 outbreak, with young Millennials who usually do not take out trip protection showing a 15 per cent increase in intention to purchase an international travel insurance policy.