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Travel Insurance - UK - February 2015

“If consumers are not asking for specialised policies or extra benefits, why not cut through the competing marketing messages by becoming the most convenient insurer? Convenience is a highly prized commodity in modern society and harnessing this could be a successful way of boosting policy sales.”

Rich Shepherd, Financial Services Research Analyst

This report coveres the following areas:

  • The problem with price
  • If one size fits all, how can insurers stand out?
  • What will be the marketplace of tomorrow?

Travel insurance is seen as an essential product by many and buying a policy is an almost universal part of arranging a holiday. However, the market is hugely dependent on consumers’ holiday habits. The financial pressures on households in the aftermath of the economic crash changed people’s holiday habits. Some turned to ‘staycations’ as a cheaper alternative while others couldn’t afford to go away at all. The results have meant that travel insurers are struggling for growth.

In the last year, though, there have been signs of recovery. The market is expected to have remained largely flat in 2014, having fallen every year since 2009. Consumers have returned to taking overseas holidays and are starting to feel some of the benefits of the recovery in their wallets as a result of low inflation. The next stage of recovery for insurers is to find a way to increase premiums without damaging consumer demand in order to return the market to growth.

This report looks at the travel insurance market as a whole, considering both single-trip and annual multi-trip policies sold directly by insurers and as add-ons to other products such as packaged bank accounts. The report examines major issues in the market and how the current market environment can be seen in relation to wider social trends identified by Mintel. The report looks as innovation in travel insurance as well as examining the size of the market, including a five-year forecast, and discusses the biggest players in the market.

Mintel’s brand research examines consumers’ attitudes towards different travel insurance providers. Finally Mintel’s exclusive consumer research examines how people bought their last travel insurance policy and what type of policy they chose. Claims experiences are investigated, as well as the main factors affecting consumers’ choice of policy and their attitudes towards travel insurance in general.

 

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Table of contents

  1. Introduction

      • Abbreviations
      • Executive Summary

          • The market
            • Travel insurance market expected to grow over the next five years
              • Figure 1: Forecast of value of gross written travel insurance premiums – Fan chart, 2009-19
            • Market factors
              • Overseas holidays are growing again
                • Figure 2: Domestic vs overseas holidays, 2010-14
              • Claims costs fall slightly but remain a strain on profits
                • Figure 3: Value of travel insurance claims, 2004-13
              • Companies, products and innovations
                • AXA is the travel insurance market leader
                  • Figure 4: Leading travel insurance underwriters, by GWP (UK business only), 2011-13
                • The consumer
                  • 87% insured their holiday abroad in the last year
                    • Figure 5: Proportion of holidaymakers covered by insurance on their last holiday abroad, October 2014
                  • The internet is the most used sales channel for travel insurance
                    • Figure 6: Method of arranging travel insurance (last holiday abroad within last 12 months), October 2014
                  • Most travel insurance customers have never made a claim, but those who have are satisfied
                    • Figure 7: Time since most recent travel insurance claim, October 2014
                    • Figure 8: Satisfaction with most recent travel insurance claim, October 2014
                  • Price is the biggest consideration for travel insurance
                    • Figure 9: Factors affecting choice of travel insurance, October 2014
                  • Half of consumers say travel insurance is essential
                    • Figure 10: Agreement with statements about travel insurance, October 2014
                  • What we think
                  • Issues and Insights

                      • The problem with price
                        • The facts
                          • The implications
                            • If one size fits all, how can insurers stand out?
                              • The facts
                                • The implications
                                  • What will be the marketplace of tomorrow?
                                    • The facts
                                      • The implications
                                      • Trend Application

                                        • There is still work to be done to clarify the role of EHICs
                                          • Satisfied claimants are worth shouting about
                                            • Help, wherever and whenever it’s needed
                                            • Market Drivers

                                              • Key points
                                                • Consumer confidence stalled in 2014…
                                                  • Figure 11: Financial health index, 2009-15
                                                  • Figure 12: Financial confidence index, 2009-15
                                                • …but holidays are a spending priority for many
                                                  • Figure 13: “Where do you choose to spend your extra money (once all of your bills are paid and you have bought all of the things you really need)?”, January 2015
                                                • Domestic destinations are more common than overseas breaks…
                                                  • Figure 14: Holiday destinations visited in the last 12 months, October 2014
                                                • …but foreign holidays are on the up again
                                                  • Figure 15: Domestic vs overseas holidays, 2010-14
                                                • Claims costs fall slightly…
                                                  • Figure 16: Volume and value of travel insurance claims, 2004-13
                                                • …but average claims costs are up
                                                  • Figure 17: Average cost of travel insurance claims, by type of claim, 2009-13
                                                • Most claims are for medical expenses
                                                  • Figure 18: Share of value of travel insurance claims, by type of claim, 2013
                                                • Increasing cost of holidays highlights need for cover
                                                  • Figure 19: Average cost of holidays, 2010-14
                                              • SWOT Analysis

                                                  • Figure 20: SWOT analysis of the UK travel insurance market, February 2015
                                              • Who’s Innovating?

                                                • Key points
                                                  • The need for informed innovation
                                                    • All-inclusive products
                                                      • Providing access to real-time information
                                                        • Developing broader cover
                                                        • Market Size and Forecast

                                                          • Key points
                                                            • Market contraction continued in 2013
                                                              • Figure 21: Volume and value of total travel insurance policy sales, 2009-14
                                                            • Annual policies dominate the travel insurance market
                                                              • Figure 22: Single-trip vs annual travel insurance policy sales, 2009-13
                                                              • Figure 23: Annual vs single-trip travel insurance policies, by share of total market, by GWP, 2009-13
                                                            • Premium prices remain stagnant
                                                              • Figure 24: Average travel insurance premium, single-trip vs annual policies, 2009-13
                                                            • Market forecast
                                                              • Number of annual policy sales expected to grow by 11% by 2019…
                                                                • Figure 25: Forecast of volume of travel insurance policies sold – Fan chart, 2009-19
                                                                • Figure 26: Forecast of volume of travel insurance policies sold, 2009-19
                                                              • …while GWP is expected to increase by 23% in the next five years
                                                                • Figure 27: Forecast of value of gross written travel insurance premiums – Fan chart, 2009-19
                                                                • Figure 28: Forecast of value of gross written travel insurance premiums, 2009-19
                                                              • Forecast methodology
                                                                • Fan chart explanation
                                                                • Market Share

                                                                  • Key points
                                                                    • AXA is the market leader in travel insurance
                                                                      • Figure 29: Leading travel insurance underwriters, by GWP (UK business only), 2011-13
                                                                    • The importance of partnerships
                                                                      • Figure 30: Current account provider rankings, by share of main current account market, May 2014, and banks’ travel insurance providers, February 2015
                                                                  • Companies and Products

                                                                    • AXA
                                                                      • Travel insurance product range
                                                                        • Market position
                                                                          • Recent activity
                                                                            • Aviva
                                                                              • Travel insurance product range
                                                                                • Market position
                                                                                  • Recent activity
                                                                                    • Direct Line Group
                                                                                      • Travel insurance product range
                                                                                        • Market position
                                                                                          • Recent activity
                                                                                            • Cigna Insurance Services
                                                                                              • Travel insurance product range
                                                                                                • Market position
                                                                                                  • Recent activity
                                                                                                    • Ageas UK
                                                                                                      • Travel insurance product range
                                                                                                        • Market position
                                                                                                          • Recent activity
                                                                                                          • Brand Research

                                                                                                            • What you need to know
                                                                                                              • Brand map
                                                                                                                • Figure 31: Attitudes towards and usage of selected brands, December 2014
                                                                                                              • Key brand metrics
                                                                                                                • Figure 32: Key metrics for selected brands, December 2014
                                                                                                              • Brand attitudes: AA Insurance, Aviva and AXA most noted for quality
                                                                                                                • Figure 33: Attitudes, by brand, December 2014
                                                                                                              • Brand personality: Advertising tends to shape personality traits, with Direct Line and Churchill most likely to be seen as upbeat
                                                                                                                • Figure 34: Brand personality – Macro image, December 2014
                                                                                                              • Lesser-known brands Columbus Direct and InsureandGo struggle to create positive brand associations
                                                                                                                • Figure 35: Brand personality – Micro image, December 2015
                                                                                                              • Brand analysis
                                                                                                                • AA Insurance uses strong background in roadside assistance expertise to its advantage
                                                                                                                  • Figure 36: User profile of AA Insurance, December 2014
                                                                                                                • Aviva enjoys all-round brand strength
                                                                                                                  • Figure 37: User profile of Aviva, December 2014
                                                                                                                • Post Office Insurance has a strong association with customer service thanks to staff interaction at branches
                                                                                                                  • Figure 38: User profile of Post Office Insurance, December 2014
                                                                                                                • AXA has a more serious brand image among consumers
                                                                                                                  • Figure 39: User profile of AXA, December 2014
                                                                                                                • InsureandGo relies on its strong value element
                                                                                                                  • Figure 40: User profile of InsureandGo, December 2014
                                                                                                                • MORE TH>N could define itself a little more clearly
                                                                                                                  • Figure 41: User profile for MORE TH>N, December 2014
                                                                                                                • Churchill
                                                                                                                  • Figure 42: User profile of Churchill, December 2014
                                                                                                                • Direct Line is upbeat and well known, but has second-highest proportion of negative reviews
                                                                                                                  • Figure 43: User profile of Direct Line, December 2014
                                                                                                                • Saga Insurance has an advantage through its 50+ specialism
                                                                                                                  • Figure 44: User profile of Saga Insurance, December 2014
                                                                                                                • Columbus Direct struggles to create an impression on consumers
                                                                                                                  • Figure 45: User profile of Columbus Direct, December 2014
                                                                                                              • Brand Communication and Promotion

                                                                                                                • Key points
                                                                                                                  • Travel insurance adspend fell by 10% in 2014
                                                                                                                    • Figure 46: Total adspend in the UK travel insurance market, 2010-14
                                                                                                                  • Staysure is the highest-spending travel insurance advertiser
                                                                                                                    • Figure 47: Top six travel insurance advertisers, 2012-14
                                                                                                                  • Television is the dominant medium for travel insurance advertising
                                                                                                                    • Figure 48: Total travel insurance adspend, by media type, 2014
                                                                                                                  • A note on adspend
                                                                                                                  • Channels to Market

                                                                                                                    • Key points
                                                                                                                      • Most holidaymakers bought their travel insurance online
                                                                                                                        • Figure 49: Method of arranging travel insurance (last holiday abroad within last 12 months), October 2014
                                                                                                                      • Can travel agents do more at the point of sale?
                                                                                                                        • Convenience is more important for arranging single-trip policies
                                                                                                                          • Figure 50: Method of arranging travel insurance (last holiday abroad within last 12 months), by type of cover held, October 2014
                                                                                                                      • Travel Insurance Taken Out on Last Holiday Abroad

                                                                                                                        • Key points
                                                                                                                          • The vast majority of overseas travellers insured their last trip
                                                                                                                            • Figure 51: Proportion of holidaymakers covered by insurance on their last holiday abroad, October 2014
                                                                                                                          • Single-trip policies remain popular…
                                                                                                                            • …but annual policies are favoured by better-off travellers
                                                                                                                              • Figure 52: Type of travel insurance taken out for last overseas holiday (last 12 months), by gross annual household income, October 2014
                                                                                                                            • A quarter of under-25s went on holiday uninsured
                                                                                                                              • Figure 53: Percentage of people who did not get travel insurance for their last holiday abroad, by age, October 2014
                                                                                                                          • Claims Experience and Satisfaction

                                                                                                                            • Key points
                                                                                                                              • Most travel insurance customers have never made a claim
                                                                                                                                • Figure 54: Time since most recent travel insurance claim, October 2014
                                                                                                                              • Four fifths of claimants were satisfied with how their claim was handled
                                                                                                                                • Figure 55: Satisfaction with most recent travel insurance claim, October 2014
                                                                                                                              • Annual policyholders are more likely to make a claim
                                                                                                                                • Figure 56: Incidence of travel insurance claims, by type of travel insurance held for last overseas holiday (in the last 12 months), October 2014
                                                                                                                            • Factors Affecting Choice of Travel Insurance

                                                                                                                              • Key points
                                                                                                                                • Price is key in choosing a policy…
                                                                                                                                  • Figure 57: Factors affecting choice of travel insurance policy, October 2014
                                                                                                                                • …but excess costs are an afterthought for many
                                                                                                                                  • Health comes before possessions…
                                                                                                                                    • …and concern about pre-existing conditions increases with age
                                                                                                                                      • Figure 58: Agreement that ‘cover for pre-existing medical conditions’ is one of the three most important considerations when choosing a travel insurance policy, by age, October 2014
                                                                                                                                    • Little interest in cash cover
                                                                                                                                    • Attitudes towards Travel Insurance

                                                                                                                                      • Key points
                                                                                                                                        • Half see travel insurance as essential
                                                                                                                                          • Figure 59: Agreement with statements about travel insurance, October 2014
                                                                                                                                        • Only 37% take their cover documents away with them
                                                                                                                                          • Older consumers are more cautious
                                                                                                                                            • Figure 60: Agreement with the statements “It is essential to have travel insurance when you go abroad” and “I always take my travel insurance documents with me when I go on holiday”, by age, October 2014
                                                                                                                                          • Lack of trust is a barrier to purchase
                                                                                                                                            • Figure 61: Agreement with the statement “I do not trust travel insurance companies to pay out fairly in the event of a claim”, by whether consumers had travel insurance for their last overseas holiday (last 12 months), October 2014
                                                                                                                                          • Few are concerned about getting a bespoke product
                                                                                                                                            • One in six still think an EHIC is enough
                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                              • Volume
                                                                                                                                                • Figure 62: Best- and worst- case forecast of volume of travel insurance policies sold, 2014-19
                                                                                                                                              • Value
                                                                                                                                                • Figure 63: Best- and worst-case forecast of gross written travel insurance premiums, 2014-19

                                                                                                                                            Companies Covered

                                                                                                                                            To learn more about the companies covered in this report please contact us.

                                                                                                                                            Travel Insurance - UK - February 2015

                                                                                                                                            US $2,583.33 (Excl.Tax)