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Travel Insurance - UK - February 2010

This report examines recent challenges and developments in the travel insurance market, including wider macroeconomic factors, regulatory changes, recent innovations and changes in the distribution of policies. It also examines the size of the market, including the split of single-trip and annual multi-trip policies and features analysis of underwriter share. Mintel’s exclusive consumer research examines holiday trends, travel insurance product ownership, distribution and the main considerations when consumers arrange travel insurance products.

  • Only 10% of holidaymakers are prepared to travel abroad without insurance. And despite widespread concerns, Mintel’s consumer research reveals uninsured travel did not increase in 2009.
  • Travel agents saw their share of the market fall sharply in 2009, following the introduction of new FSA regulations and the continuing trend for independent holidays.
  • Awareness of existing travel insurance policies and cover included as part of other financial products such as value-added current accounts and home insurance increased significantly during 2009.
  • Cover for medical expenses is the most important consideration for people arranging travel insurance, followed by price and cover for lost and damaged baggage.
  • Travellers looking for the lowest priced policy are twice as likely as average to use price comparison sites to arrange insurance cover.
  • Young travellers (aged 15-24) are the most likely to travel without insurance and so represent the main opportunity to expand travel insurance ownership.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Abbreviations
        • Future Opportunities

          • Striving for stability by eliminating risk
            • Travellers take the time to review insurance options
              • Demonstrating value
                • Reaching out to the uninsured
                • Market in Brief

                  • Travel insurance market declines during 2009
                    • Figure 1: UK travel insurance – GWP, 2004-09
                  • Overseas trips fell by 15% in 2009
                    • Figure 2: Domestic vs overseas holidays, 2004-09
                  • No increase in uninsured travellers…
                    • Figure 3: Trends in arrangements made for travel insurance on last overseas trip, 2008 and 2009
                  • …but consumers are much more aware of existing cover
                    • Travel agents lose share
                      • Figure 4: Trends in methods/channels used to arrange travel insurance cover, 2008 and 2009
                    • Medical expense cover is primary consideration
                      • Figure 5: Most important considerations when arranging a travel insurance policy, November 2009
                    • AXA tops list of travel insurance underwriters
                      • Figure 6: Top ten travel insurance underwriters by GWP, 2008
                  • Internal Market Environment

                    • Key points
                      • Overseas holidays fall by 15% in 2009
                        • Figure 7: Domestic vs overseas holidays, 2004-09
                      • All regions impacted by the decline in holidays
                        • Figure 8: Outbound holiday visits, by region visited, 2004-09
                      • Around 60% of holidays are arranged independently
                        • Figure 9: Inclusive holidays versus independent holidays, by volume, 2004-09
                      • Travel firms and financial failure
                        • ATOL scheme to be reviewed
                          • Claim incidences fall but costs continue to rise
                            • Figure 10: Travel insurance claims incurred, by volume and value, 2004-09
                          • Recession may lead to an increase in fraudulent activity
                            • FSA regulation creates a level playing field
                              • Swine flu – limited impact
                              • Broader Market Environment

                                • Key points
                                  • Taking a more cautious approach
                                    • Consumer confidence shows signs of improvement
                                      • Figure 11: Financial confidence, January-December 2009
                                    • Holidays remain a favoured luxury
                                      • Figure 12: What people choose to spend any extra money on, November 2009
                                    • Appetite for travel abroad undermined by fall in the value of Sterling
                                      • Figure 13: Spot exchange rates, US Dollar, euro into Sterling, January 2008-October 2009
                                    • Over-65s market is set to become increasingly important
                                      • Figure 14: UK population, by age, 2004-14
                                    • Fears over the Equality Bill are allayed
                                    • Competitive Context

                                      • Key points
                                        • Around 10% of people opt to travel abroad without insurance
                                          • Figure 15: Most recent travel insurance arrangements, November 2009
                                        • An issue of trust
                                          • EHIC – a significant competitor?
                                            • Growth of packaged accounts poses a threat to standalone providers
                                              • Travel insurance is the most popular packaged account benefit
                                                • Figure 16: Benefits most appealing from premium and packaged current accounts, March 2009
                                            • Strengths and Weaknesses in the Market

                                                • Figure 17: Strengths and weaknesses in the travel insurance market, February 2010
                                            • Who’s Innovating?

                                              • Key points
                                                • An adjustable travel insurance policy
                                                  • Focus on the over-50s market
                                                    • Staysure
                                                      • RIAS
                                                        • Aon France launches rainfall cover
                                                          • InsureandGo launches new products and services
                                                            • Green policies
                                                              • Holiday dispute cover
                                                                • Sheilas’ Wheels targets female travellers
                                                                • Trade Perspective

                                                                    • Impact of the recession
                                                                      • Single-trip vs annual multi-trip policies
                                                                        • Barriers to purchase
                                                                          • Future challenges, developments and innovations
                                                                          • Market Size and Forecast

                                                                            • Key points
                                                                              • Travel insurance premiums decline in 2009
                                                                                • Figure 18: UK travel insurance – GWP, 2004-09
                                                                              • Volume falls more sharply than value
                                                                                • Figure 19: Volume and value of single-trip and annual policies, 2004-09
                                                                              • Single-trip vs annual multi-trip cover
                                                                                • Market forecast
                                                                                  • Figure 20: Forecast of travel insurance – GWP, 2004-14
                                                                              • Market Share

                                                                                • Key points
                                                                                  • AXA leads the way in the UK travel insurance market
                                                                                    • Figure 21: Top ten travel insurance underwriters, by GWP, 2008
                                                                                  • Underwriters and travel insurance brands
                                                                                    • Figure 22: Selected travel insurance brands and underwriters, February 2010
                                                                                • Companies and Products

                                                                                  • Recent developments in the market
                                                                                    • Major players
                                                                                      • AIG/Chartis
                                                                                        • Aviva
                                                                                          • AXA
                                                                                            • Europ Assistance
                                                                                              • Europ Assistance
                                                                                                • RBS Insurance
                                                                                                • Channels to Market

                                                                                                  • Key points
                                                                                                    • Travel agents lose ground but use of free cover increases
                                                                                                      • Figure 23: Trends in methods/channels used to arrange travel insurance cover, 2008 and 2009
                                                                                                    • Banks and building societies increase their presence in market
                                                                                                      • Figure 24: Trends in channels used to purchase insurance, 2005-09
                                                                                                    • Internet overtakes telephone as the most popular channel
                                                                                                      • Figure 25: Trends in methods used to arrange travel insurance, 2007-09
                                                                                                  • Brand Communication and Promotion

                                                                                                    • Key points
                                                                                                      • Adspend on travel insurance products falls by 28% in 2008/09
                                                                                                        • Figure 26: Adspend for travel and sport insurance, 2006/07-2008/09
                                                                                                      • Direct mail accounts for two thirds of travel insurance adspend
                                                                                                        • Figure 27: Adspend for travel and sport insurance, by media type, 2006/07-2008/09
                                                                                                      • Saga is the top advertiser in the sector
                                                                                                        • Figure 28: Top advertisers of travel insurance over the last three years (combined), 2006/07-2008/09
                                                                                                      • Travel insurance adspend has distinct seasonal peaks
                                                                                                        • Figure 29: Monthly trends in travel insurance adspend, 2008
                                                                                                    • The Consumer – Travel and Holiday Trends

                                                                                                      • Key points
                                                                                                        • Note on consumer research
                                                                                                          • The year of the ‘staycation’
                                                                                                              • Figure 30: Holidays taken in the past 12 months, November 2009
                                                                                                            • Third agers and women are more likely to have been on holiday
                                                                                                              • Figure 31: Holidays taken in the past 12 months, by gender, age, lifestage, marital status and presence of children in household, November 2009
                                                                                                            • Affluence is key to holiday trends
                                                                                                              • Figure 32: Holidays taken in the last 12 months, by socio-economic group, working status, household income, household tenure and internet access, November 2009
                                                                                                            • A fifth took multiple overseas trips during 2009
                                                                                                              • Figure 33: Number of holidays (short or long) taken in the past 12 months, November 2009
                                                                                                          • The Consumer – Travel Insurance Product Ownership

                                                                                                            • Key points
                                                                                                              • No increase in uninsured travel during 2009
                                                                                                                  • Figure 34: Travel insurance ownership, November 2009
                                                                                                                • Awareness of existing policies increased during 2009
                                                                                                                  • Figure 35: Trends in arrangements made for travel insurance on last overseas trip, 2008 and 2009
                                                                                                                • Opportunities to increase travel insurance ownership
                                                                                                                  • Figure 36: Travel insurance policy ownership, by gender, age, lifestage, marital status and presence of children in household, November 2009
                                                                                                                • Higher earners opt for annual travel insurance policies
                                                                                                                  • Figure 37: Travel insurance policy ownership, by socio-economic group, working status, household income, household tenure and internet access, November 2009
                                                                                                                • Travellers understand the value offered by annual travel insurance policies
                                                                                                                  • Figure 38: Arrangements made for travel insurance on last overseas trip, by number of holidays (short or long) taken in the past 12 months, November 2009
                                                                                                                • Worldwide travellers more likely to opt for annual cover
                                                                                                                  • Figure 39: Travel insurance policy ownership, by holidays taken abroad in the past 12 months, November 2009
                                                                                                                • Single-trip cover favoured for packaged holidays
                                                                                                                  • Figure 40: Travel insurance policy ownership, by package and independent holidays, November 2009
                                                                                                              • The Consumer – Purchasing Travel Insurance

                                                                                                                • Key points
                                                                                                                  • Travel agents lose market share during 2009…
                                                                                                                      • Figure 41: Trends in methods/channels used to arrange travel insurance cover, 2008 and 2009
                                                                                                                    • …but use of free or inclusive cover is increasing
                                                                                                                      • Younger travellers more likely to arrange insurance through travel agents
                                                                                                                        • Figure 42: Methods/channels used to arrange travel insurance cover, by gender, age, lifestage, marital status and presence of children in household, November 2009
                                                                                                                      • Higher earners are more likely to go directly to an insurer
                                                                                                                        • Figure 43: Methods/channels used to arrange travel insurance cover, by socio-economic group, working status and household income, November 2009
                                                                                                                      • Direct insurers account for almost 50% of annual travel insurance market
                                                                                                                        • Figure 44: Where obtain last travel insurance policy, by arrangements made for travel insurance on last overseas trip, November 2009
                                                                                                                      • Direct insurers lead the way in both independent and packaged sectors
                                                                                                                        • Figure 45: Methods/channels used to arrange travel insurance cover, by independent and package holidays, November 2009
                                                                                                                    • The Consumer – Motivations for Purchasing Travel Insurance and Targeting Opportunities

                                                                                                                      • Key points
                                                                                                                        • Cover for medical expenses is the number one motivation
                                                                                                                            • Figure 46: Most important considerations when arranging a travel insurance policy, November 2009
                                                                                                                          • A third of travellers opt for low-cost policies
                                                                                                                            • More than a quarter have only one consideration when arranging cover
                                                                                                                              • Figure 47: Most important considerations when arranging a travel insurance policy, by repertoire of number of most important things considered when arranging a travel insurance policy, November 2009
                                                                                                                            • Price is more likely to be an issue for single-trip policyholders
                                                                                                                              • Figure 48: Most important considerations when arranging a travel insurance policy, by arrangements made for travel insurance on last overseas trip, November 2009
                                                                                                                            • Concerns about medical expense cover are heightened for those travelling outside Europe
                                                                                                                              • Figure 49: Most important considerations when arranging a travel insurance policy, by holidays taken in the past 12 months, November 2009
                                                                                                                            • A fifth of people looking for the lowest price turn to price-comparison sites
                                                                                                                              • Figure 50: Methods/channels used to arrange travel insurance cover, by most important considerations when arranging a travel insurance policy, November 2009
                                                                                                                            • Target group analysis
                                                                                                                              • Figure 51: Travel insurance target groups, November 2009
                                                                                                                            • Medical cover seekers
                                                                                                                              • Price conscious travellers
                                                                                                                                • Personal possession prioritisers
                                                                                                                                  • The disinterested
                                                                                                                                  • Appendix – The Consumer – Motivations for Purchasing Travel Insurance and Targeting Opportunities

                                                                                                                                      • Figure 52: Most important considerations when arranging travel insurance, by demographics, November 2009
                                                                                                                                      • Figure 53: Next most important considerations when arranging travel insurance, by demographics, November 2009
                                                                                                                                      • Figure 54: Travel insurance target groups, by demographics, November 2009
                                                                                                                                      • Figure 55: Travel insurance ownership, by travel insurance target groups, November 2009
                                                                                                                                      • Figure 56: Channel/method used to arrange travel insurance, by travel insurance target groups, November 2009
                                                                                                                                      • Figure 57: Most important considerations when arranging travel insurance, by travel insurance target groups, November 2009

                                                                                                                                  Companies Covered

                                                                                                                                  • Abbey
                                                                                                                                  • Abercrombie & Kent
                                                                                                                                  • Age Concern England
                                                                                                                                  • AIG Europe, SA
                                                                                                                                  • AIG Group (American International Group Inc)
                                                                                                                                  • Air Travel Organisers' Licensing (ATOL)
                                                                                                                                  • Alliance Boots
                                                                                                                                  • Allianz Group
                                                                                                                                  • American Express UK
                                                                                                                                  • Asda Group Ltd
                                                                                                                                  • Association of British Insurers
                                                                                                                                  • Association of British Travel Agents (The)
                                                                                                                                  • Automobile Association (AA)
                                                                                                                                  • Aviva Plc
                                                                                                                                  • AXA PPP healthcare
                                                                                                                                  • AXA UK plc
                                                                                                                                  • Bank of England
                                                                                                                                  • Barclaycard
                                                                                                                                  • Barclays Bank plc
                                                                                                                                  • British Airways Plc
                                                                                                                                  • Brittany Ferries
                                                                                                                                  • BUPA
                                                                                                                                  • Churchill Insurance
                                                                                                                                  • Civil Aviation Authority
                                                                                                                                  • Co-operative Group
                                                                                                                                  • Columbus Direct
                                                                                                                                  • Debenhams Total (GTV)
                                                                                                                                  • Direct Line Group Limited
                                                                                                                                  • Essential Travel Ltd
                                                                                                                                  • Eurocamp
                                                                                                                                  • Europ Assistance UK
                                                                                                                                  • Financial Services Authority (The)
                                                                                                                                  • First Trust Bank
                                                                                                                                  • FirstAssist Group Limited
                                                                                                                                  • Flexicover Direct
                                                                                                                                  • FlyBE
                                                                                                                                  • Fortis Insurance Limited
                                                                                                                                  • Freeview
                                                                                                                                  • Go Travel Insurance Services Ltd
                                                                                                                                  • Great Lakes Reinsurance
                                                                                                                                  • GreenBee
                                                                                                                                  • Gresham Insurance Company
                                                                                                                                  • Groupama Insurances
                                                                                                                                  • Halifax Mortgage Services
                                                                                                                                  • Holiday Extras
                                                                                                                                  • HSBC Private Bank (UK) Limited
                                                                                                                                  • InsureAndGo
                                                                                                                                  • J. Sainsbury
                                                                                                                                  • John Lewis Partnership
                                                                                                                                  • Lloyds Banking Group
                                                                                                                                  • Lloyds TSB Insurance
                                                                                                                                  • Market & Opinion Research International (MORI)
                                                                                                                                  • Marks & Spencer
                                                                                                                                  • MBNA Europe
                                                                                                                                  • mmO2 plc
                                                                                                                                  • Mondial Assistance Group
                                                                                                                                  • MORE TH>N
                                                                                                                                  • Munich Re Group
                                                                                                                                  • Nationwide Building Society
                                                                                                                                  • NatWest
                                                                                                                                  • Norwich Union
                                                                                                                                  • One Stop Community Stores Ltd
                                                                                                                                  • Outdoor Advertising Association of Great Britain
                                                                                                                                  • Post Office Limited
                                                                                                                                  • Retirement Insurance Advisory Service (RIAS)
                                                                                                                                  • Royal Automobile Club
                                                                                                                                  • Royal Bank of Scotland Group plc
                                                                                                                                  • RSA
                                                                                                                                  • Ryanair Holdings plc
                                                                                                                                  • Saga Services (finance)
                                                                                                                                  • Sheilas' Wheels
                                                                                                                                  • Silverjet Aviation Limited
                                                                                                                                  • Tesco Plc
                                                                                                                                  • The Globespan Group plc
                                                                                                                                  • The National Insurance and Guarantee Corporation Limited
                                                                                                                                  • Thomas Cook Group PLC
                                                                                                                                  • UKI Partnerships
                                                                                                                                  • Virgin Atlantic Airways Limited
                                                                                                                                  • Virgin Holidays
                                                                                                                                  • XL Leisure
                                                                                                                                  • Zoom Airlines Ltd

                                                                                                                                  Travel Insurance - UK - February 2010

                                                                                                                                  £1,995.00 (Excl.Tax)