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Travel Insurance - UK - February 2011

This report looks in detail at the travel insurance sector and the issues and challenges currently affecting the market. The report examines the factors that influence the market, such as people’s holiday trends, as well as wider external factors like PDI and the ageing population. Alternative products such as the EHIC are also explored. The size of the market is examined, including forecast growth in the sector, as well as the main players in the market and their respective market shares.

  • The market has proved extremely resilient during the economic downturn, with total GWP falling by just 3% in 2009, compared with a 15% decline in the number of holiday visits abroad. Mintel expects the market to outperform again in 2010, with total GWP falling by just 1%.
  • Emerging target segments are creating opportunities for providers. The weakness of Sterling against the euro has encouraged many holidaymakers to seek out alternative destinations, while the growing number of older travellers presents a further opportunity.
  • There were big changes in market share in 2009. AXA remained the leading underwriter, but Munich Re leapt into second place, having seen its GWP more than treble thanks to a number of big contract wins.
  • Bancassurers have increased their share of the market in recent years, thanks largely to the growth of packaged current accounts. Aggregators have also become more dominant as people are more price conscious in the current climate.
  • Mintel’s consumer research highlights the perceived importance of having cover, with less than one in ten overseas holidaymakers choosing to travel abroad without insurance.
  • Cover for medical expenses remains the most important feature of policies, particularly for older people (who are more likely to have underlying health problems), although younger adults tend to be much more price sensitive.
  • Demonstrating the unfair perception that people have towards insurers, almost a fifth of people say that they don’t trust insurers to pay out, but of those policyholders who have made a claim, just 13% were dissatisfied with the process.

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Table of contents

  1. Issues in the Market

      • Key issues
        • Abbreviations
        • Market in Brief

          • The travel insurance market has proved very resilient
            • Figure 1: Travel insurance GWP, 2005-10
          • Holiday cutbacks are the biggest threat
            • The weak value of Sterling has also affected holidaymakers
              • Packaged accounts and the EHIC are the main competitors
                • Figure 2: Ownership and use of benefits on fee-charging packaged accounts, March 2010
              • AXA is the leading underwriter
                • Figure 3: Top ten travel insurance underwriters, by GWP, 2008 and 2009
              • A diverse market in terms of advertising
                • Bancassurers and aggregators continue to grow
                  • Figure 4: Channels used to purchase travel insurance, 2007-10
                • Most regard travel insurance as an essential purchase
                  • Figure 5: Travel insurance ownership, November 2010
                • Medical cover is the most important benefit
                  • Figure 6: Attitudes towards travel insurance, November 2010
              • Future Opportunities

                  • A year of disruption prompts more emphasis on cover
                    • Making more use of peer-to-peer marketing
                    • Internal Market Environment

                      • Key points
                        • Overseas holidays are back on the agenda
                          • Figure 7: Domestic vs overseas holidays, 2004-10
                        • Europe is by far the most popular destination
                          • Figure 8: Outbound holiday visits, by region visited, 2004-09
                        • The move towards independent holidays
                          • Figure 9: Inclusive holidays vs independent holidays, by volume, 2004-09
                        • Several travel firms collapsed during the recession
                          • Figure 10: ATOL tour operator failures/closures in the UK, 2010
                        • The year of strikes, volcanic ash and snow disruption
                          • Putting the focus on quality of cover over price
                            • Claim payments increased by just 6% in 2009
                              • Figure 11: Travel insurance claims incurred, by volume and value, 2004-09
                            • Closer regulation for tied providers
                            • Broader Market Environment

                              • Key points
                                • The uncertain economic environment
                                  • Figure 12: GDP, PDI, consumer expenditure and savings, at current prices, 2005-15
                                • More consumers are struggling
                                  • Figure 13: Financial confidence, December 2009-December 2010
                                • Holidays are still highly sought after
                                  • Figure 14: What people choose to spend any extra money on, December 2010
                                • Weaker value of Sterling makes holidays more expensive
                                  • Figure 15: Spot exchange rates, US Dollar and euro into Pounds Sterling, January 2008-November 2010
                                • The UK’s ageing population also presents challenges
                                  • Figure 16: Trends in the age structure of the UK population, 2005-15
                                • Growth in the AB population is a positive sign
                                  • Figure 17: UK adult population, by socio-economic group, 2005-15
                              • Competitive Context

                                • Key points
                                  • Most consumers do take out travel insurance
                                    • Figure 18: Travel insurance ownership, November 2010
                                  • Packaged current accounts are a potential competitor
                                    • Figure 19: Ownership and use of benefits on fee-charging packaged accounts, March 2010
                                  • The EHIC deters some holidaymakers
                                  • SWOT Analysis

                                      • Figure 20: Travel insurance – SWOT analysis, 2009
                                  • Who’s Innovating?

                                    • Key points
                                      • Travel disruption causes emergency policy extensions
                                        • Aviva
                                          • HSBC and First Direct
                                            • Columbus Travel
                                              • Insolvency of airlines prompts protection for independent travel
                                                • Last-minute travel insurance policies
                                                  • Catering for third agers
                                                    • Online assessment of pre-existing medical conditions
                                                      • Embracing technology to improve customer service
                                                        • Europ Assistance
                                                        • Market Size and Forecast

                                                          • Key points
                                                            • GWP fell by just 3% in 2009
                                                              • Figure 21: Travel insurance GWP, 2005-10
                                                            • The shift towards annual policies continues
                                                              • Figure 22: Volume and value of single-trip and annual policies, 2005-10
                                                            • Forecast
                                                              • Single-trip policies expected to stabilise
                                                                • Figure 23: Forecast of single-trip policies – GWP, 2005-15
                                                              • Slowdown in the growth of annual polices
                                                                • Figure 24: Forecast of annual policies – GWP, 2005-15
                                                              • Total GWP will grow by 29% over the next five years
                                                                • Figure 25: Forecast of travel insurance – GWP, 2005-15
                                                              • Forecast methodology
                                                              • Market Share

                                                                • Key points
                                                                  • AXA was the leading underwriter in 2009
                                                                    • Figure 26: Top ten travel insurance underwriters, by GWP, 2008-09
                                                                  • Large shifts in GWP in 2009
                                                                    • A market based on partnerships
                                                                      • Figure 27: Selected travel insurance brands and underwriters, February 2010
                                                                  • Companies and Products

                                                                    • AXA
                                                                        • Figure 28: Key financials for AXA UK, 2008 and 2009
                                                                      • Aviva
                                                                          • Figure 29: Key financials for Aviva UK, 2008 and 2009
                                                                        • RBS Group
                                                                            • Figure 30: Key financials for RBS Group, 2008 and 2009
                                                                          • Europ Assistance
                                                                            • Munich Re/ERGO Group
                                                                                • Figure 31: Key financials for ERGO (the primary insurance business of Munich Re), 2008 and 2009
                                                                            • Brand Communication and Promotion

                                                                              • Key points
                                                                                • Total sector adspend has fallen by a third in two years
                                                                                  • Figure 32: Topline adspend for travel insurance, 2007/08-2009/10
                                                                                • Saga had the highest adspend in 2009/10
                                                                                  • Figure 33: Top ten travel insurance advertisers, 2007/08-2009/10
                                                                                • A sector that uses a very targeted approach
                                                                                  • Figure 34: Travel insurance adspend, by media type, 2009/10
                                                                                • A sector with highly seasonal advertising
                                                                                  • Figure 35: Monthly trends in travel insurance adspend, 2009
                                                                              • Channels to Market

                                                                                • Key points
                                                                                  • Banks and aggregators gain at the expense of travel agents
                                                                                    • Figure 36: Channels used to purchase travel insurance, 2007-10
                                                                                  • Policies arranged online overtake the telephone
                                                                                    • Figure 37: Methods used to arrange travel insurance, 2007-10
                                                                                • Travel and Holiday Trends

                                                                                  • Key points
                                                                                    • Domestic holidays here to stay in 2010
                                                                                      • Figure 38: Holidays taken in the last year, November 2010
                                                                                    • Affluent people more likely to take overseas holidays
                                                                                      • Figure 39: Holidays taken in the last year, by household income and socio-economic group, November 2010
                                                                                    • UK popular for multiple holidays
                                                                                      • Figure 40: Number of holidays taken in the last year, November 2010
                                                                                    • Multiple holidays abroad are the reserve of the wealthy
                                                                                      • Figure 41: Number of holidays taken abroad in the last year, by age, presence of children, socio-economic group and household income, November 2010
                                                                                  • Travel Insurance Ownership

                                                                                    • Key points
                                                                                      • Most people do make sure they have cover
                                                                                        • Figure 42: Travel insurance ownership, November 2010
                                                                                      • Older people are more risk-averse
                                                                                        • Figure 43: Travel insurance ownership, by age, working status, presence of children and marital status, November 2010
                                                                                      • Low earners prefer single-trip policies
                                                                                        • Figure 44: Travel insurance ownership, by socio-economic group and household income, November 2010
                                                                                      • Single-trip policies preferred for package holidays
                                                                                        • Figure 45: Travel insurance ownership, by holidays taken in the last year, November 2010
                                                                                      • Insurance dismissed for domestic holidays
                                                                                        • Regular holidaymakers prefer annual policies
                                                                                          • Figure 46: Travel insurance ownership, by number of holidays taken in the last year, November 2010
                                                                                      • Travel Insurance Buying Behaviour

                                                                                        • Key points
                                                                                          • Over a quarter of people use aggregators
                                                                                            • Figure 47: Methods used to arrange cover, November 2010
                                                                                          • Buying behaviour dependent upon age
                                                                                            • Figure 48: Methods used to arrange cover, by gender and age, November 2010
                                                                                          • Travel agents popular with low income groups
                                                                                            • Figure 49: Travel insurance arranged through travel agents/tour operators, by household income and socio-economic group, November 2010
                                                                                          • Big holiday spenders more likely to buy direct
                                                                                            • Figure 50: Methods used to arrange cover, by total amount spent on holidays abroad in the last year, November 2010
                                                                                          • Travel agents more popular for package holidays
                                                                                            • Figure 51: Methods used to arrange cover, by travel insurance ownership, November 2010
                                                                                        • Most Desirable Features of Travel Insurance

                                                                                          • Key points
                                                                                            • Cover for medical expenses is the top priority
                                                                                              • Figure 52: Most desirable features of travel insurance, November 2010
                                                                                            • Older travellers are more concerned about health cover
                                                                                              • Figure 53: Most desirable features of travel insurance, by gender, age and marital status, November 2010
                                                                                            • High earners look for clarity
                                                                                              • Figure 54: Most desirable features of travel insurance, by household income, November 2010
                                                                                            • Single-trip policyholders are more price sensitive
                                                                                              • Figure 55: Most desirable features of travel insurance, by travel insurance ownership, November 2010
                                                                                          • Attitudes Towards Travel Insurance

                                                                                            • Key points
                                                                                              • Loyalty and mistrust equally prominent
                                                                                                • Figure 56: Attitudes towards travel insurance, November 2010
                                                                                              • The EHIC is more of a deterrent to young people
                                                                                                • Figure 57: Attitudes towards travel insurance, by age and household income, November 2010
                                                                                              • Issues of distrust
                                                                                              • Claims Experience

                                                                                                • Key points
                                                                                                  • Claims experience fails to justify people’s distrust
                                                                                                    • Figure 58: Claims process satisfaction levels, November 2010
                                                                                                  • Older people are harder to please
                                                                                                    • Figure 59: Claims process satisfaction levels, by gender, age, socio-economic group, household income and presence of children, November 2010
                                                                                                  • Packaged current accounts may offer inferior cover
                                                                                                    • Figure 60: Methods used to arrange cover, by claims process satisfaction levels, November 2010
                                                                                                  • Claims apathy in 12% of consumers…
                                                                                                    • Figure 61: Previous claims experiences, November 2010
                                                                                                  • …and is highest amongst ABs
                                                                                                    • Figure 62: Previous claims experiences, by age, socio-economic group, household income and presence of children, November 2010
                                                                                                  • Annual policyholders may be more profitable
                                                                                                    • Transparency is key to trust
                                                                                                      • Figure 63: Previous claims experiences, by claims process satisfaction levels, November 2010
                                                                                                  • Targeting Opportunities

                                                                                                    • Key points
                                                                                                      • Almost half of travellers are Cover-oriented
                                                                                                        • Figure 64: Travel insurance target groups, November 2010
                                                                                                      • Cover-oriented
                                                                                                        • Insurance profile
                                                                                                          • Demographics
                                                                                                            • Marketing insight
                                                                                                              • Price-focused
                                                                                                                • Insurance profile
                                                                                                                  • Demographics
                                                                                                                    • Marketing insight
                                                                                                                      • Demanding Sceptics
                                                                                                                        • Insurance profile
                                                                                                                          • Demographics
                                                                                                                            • Marketing insight
                                                                                                                            • Appendix – Market Forecast

                                                                                                                                • Figure 65: Forecast of single-trip policies – GWP, 2010-15
                                                                                                                                • Figure 66: Forecast of annual policies – GWP, 2010-15
                                                                                                                            • Appendix – Product Ownership

                                                                                                                                • Figure 67: Travel insurance ownership, by demographics, November 2010
                                                                                                                            • Appendix – Travel Insurance Buying Behaviour

                                                                                                                                • Figure 68: Most popular methods used to arrange cover, by demographics, November 2010
                                                                                                                            • Appendix – Desirable Features of Travel Insurance

                                                                                                                                • Figure 69: Most popular desirable features of travel insurance, by demographics, November 2010
                                                                                                                                • Figure 70: Next most popular desirable features of travel insurance, by demographics, November 2010
                                                                                                                            • Appendix – Attitudes towards Travel Insurance

                                                                                                                                • Figure 71: Most popular attitudes towards travel insurance, by demographics, November 2010
                                                                                                                            • Appendix – Claims Experience

                                                                                                                                • Figure 72: Most popular claims process satisfaction levels, by demographics, November 2010
                                                                                                                                • Figure 73: Most popular previous claims experiences, by demographics, November 2010
                                                                                                                                • Figure 74: Next most popular previous claims experiences, by demographics, November 2010
                                                                                                                            • Appendix – Targeting Opportunities

                                                                                                                                • Figure 75: Target groups, by demographics, November 2010
                                                                                                                                • Figure 76: Travel insurance ownership, by target groups, November 2010
                                                                                                                                • Figure 77: Methods used to arrange cover, by target groups, November 2010
                                                                                                                                • Figure 78: Most desirable features of travel insurance, by target groups, November 2010
                                                                                                                                • Figure 79: Attitudes towards travel insurance, by target groups, November 2010
                                                                                                                                • Figure 80: Claims process satisfaction levels, by target groups, November 2010
                                                                                                                                • Figure 81: Previous claims experiences, by target groups, November 2010

                                                                                                                            Companies Covered

                                                                                                                            • AIG Group (American International Group Inc)
                                                                                                                            • Air Travel Organisers' Licensing (ATOL)
                                                                                                                            • Aldi Stores Ltd (UK & Ireland)
                                                                                                                            • Allianz Group
                                                                                                                            • 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 Airport Authority
                                                                                                                            • British Airways Plc
                                                                                                                            • British Insurance Brokers Association
                                                                                                                            • British Sky Broadcasting Group plc (BSkyB)
                                                                                                                            • BUPA
                                                                                                                            • Caledonian Travel Ltd
                                                                                                                            • Churchill Insurance
                                                                                                                            • Civil Aviation Authority
                                                                                                                            • Co-operative Group
                                                                                                                            • Columbus Direct
                                                                                                                            • Defaqto
                                                                                                                            • Delta Air Lines, Inc.
                                                                                                                            • Direct Line Group Limited
                                                                                                                            • Emirates
                                                                                                                            • Endsleigh Insurance Services Ltd
                                                                                                                            • ERGO Versicherungsgruppe AG
                                                                                                                            • Essential Travel Ltd
                                                                                                                            • Esure
                                                                                                                            • Europ Assistance UK
                                                                                                                            • Financial Services Authority (The)
                                                                                                                            • First Direct
                                                                                                                            • FirstAssist Group Limited
                                                                                                                            • Fortis Insurance Limited
                                                                                                                            • Freeview
                                                                                                                            • Great Lakes Reinsurance
                                                                                                                            • HBOS plc (Halifax Bank of Scotland)
                                                                                                                            • HSBC Private Bank (UK) Limited
                                                                                                                            • InsureAndGo
                                                                                                                            • J. Sainsbury
                                                                                                                            • Kantar Media
                                                                                                                            • Lidl (UK)
                                                                                                                            • Liverpool Victoria Friendly Society Limited
                                                                                                                            • Lloyds TSB Insurance
                                                                                                                            • Marks & Spencer
                                                                                                                            • mmO2 plc
                                                                                                                            • Mondial Assistance (UK) Limited
                                                                                                                            • MORE TH>N
                                                                                                                            • Munich Re Group
                                                                                                                            • Nationwide Building Society
                                                                                                                            • NatWest
                                                                                                                            • Netto Foodstores Ltd
                                                                                                                            • Octopus Travel Group Ltd
                                                                                                                            • One Stop Community Stores Ltd
                                                                                                                            • Orange plc (UK)
                                                                                                                            • Post Office Limited
                                                                                                                            • Privilege Insurance
                                                                                                                            • Prudential plc
                                                                                                                            • Retirement Insurance Advisory Service (RIAS)
                                                                                                                            • Royal Automobile Club
                                                                                                                            • Royal Bank of Scotland Group plc
                                                                                                                            • RSA
                                                                                                                            • Ryanair Holdings plc
                                                                                                                            • Saga Services (finance)
                                                                                                                            • Sainsbury's Bank
                                                                                                                            • STA Travel
                                                                                                                            • Swiftcover
                                                                                                                            • T-Mobile (UK) Ltd
                                                                                                                            • Tesco Plc
                                                                                                                            • Thomas Cook Group PLC
                                                                                                                            • Towergate Partnership
                                                                                                                            • TUI Travel PLC
                                                                                                                            • UKI Partnerships
                                                                                                                            • Virgin Atlantic Airways Limited
                                                                                                                            • Virgin Media Ltd
                                                                                                                            • Virgin Money
                                                                                                                            • Vodafone Group Plc (UK)
                                                                                                                            • Waitrose Ltd
                                                                                                                            • White Horse Insurance Ireland Ltd
                                                                                                                            • Wm Morrison Supermarkets
                                                                                                                            • Zurich Financial Services

                                                                                                                            Travel Insurance - UK - February 2011

                                                                                                                            £1,750.00 (Excl.Tax)