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Travel Insurance - UK - February 2016

“Travel insurance is at risk of becoming synonymous with low cost, low cover policies that fail to meet the needs of customers. Repositioning the product as transparent and helping to educate people would help insurers to stand out from the rest of the market. Opportunities ranging from point-of-departure sales to claims-led mobile apps remain relatively untapped, presenting the chance to steal a march on the competition.”
– Patrick Ross, Financial Services Analyst

This report discusses the following key topics:

  • Mobile apps with claims functionality could help build brand
  • Too many cheap policies come at the price of customer protection
  • Point-of-departure sales could serve the forgetful and the fearless

In 2015, travel insurance premiums are expected to have grown for the second consecutive year, relieving some of the pressure that had built on the industry following three years of decline. Single-trip policies grew at the expense of annual policies as the pursuit of lower price continues among holidaymakers.

Travel insurers can no longer rely purely on growth in the number of trips and travellers, as travel insurance penetration is being limited by lower engagement among younger generations. The people that do arrange insurance are sometimes so motivated by price that they are blind to the lack of cover associated with their low cost policy. Educating and informing the public about the importance of quality travel insurance cover is a difficult task, but it remains key to stopping low value, low cover policies from becoming the norm.

Nonetheless, there are relatively untapped opportunities available to insurers willing to invest in the travel market. Mobile apps are few in number and have the potential to build better relationships with customers. Claims-led apps are the safest bet, supported by content that users can access while they are abroad. Mobile has further potential as a sales channel, particularly at the point of departure where the forgetful are likely to be thankful for a quick and simple arrangement option.

This report covers both single-trip and annual policies, reviewing the market as a whole and how insurers are going about increasing their share of the market. Mintel’s consumer research examines how people arranged travel insurance for their last holiday, before assessing attitudes towards travel insurance and the role of mobile technology.

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The market
          • Muted growth in market value in 2015
            • Figure 1: Travel insurance gross written premium and claims incurred/loss ratio, 2011-15
          • Total claims costs have steadily decreased
            • Figure 2: Cost of travel insurance claims incurred, by type of claim, 2011-14
          • Key players
            • AXA returns to growth at the top of the market
              • Figure 3: Leading travel insurance underwriters, by GWP (UK business only), 2014
            • Post Office stands out from rivals with recent rebrand
              • Figure 4: Attitudes towards and usage of selected finance brands, November 2015
            • The consumer
              • 84% had insurance cover for their last holiday abroad
                • Figure 5: Proportion of people who had any travel insurance cover for their last holiday abroad, by age, November 2015
              • Direct channel takes close second behind comparison sites
                • Figure 6: Travel insurance provider for last holiday abroad, November 2015
              • One in 10 holidaymakers arranged their insurance using a smartphone or tablet
                • Figure 7: Travel insurance arrangement method for last holiday abroad, November 2015
              • Two thirds arranged their insurance within a month of departure
                • Figure 8: Travel insurance arrangement timeframe for last holiday abroad, November 2015
              • Travel insurance suffers from an overriding sense of obligation
                • Figure 9: Attitudes towards travel insurance, November 2015
              • Protection against failure of travel companies is key for customers
                • Figure 10: Interest in different aspects of cover, November 2015
              • 45% of people are interested in managing claims using their smartphone
                • Figure 11: Most useful mobile app features, November 2015
              • What we think
              • Issues and Insights

                • Mobile apps with claims functionality could help build brand
                  • The facts
                    • The implications
                      • Too many cheap policies come at the price of customer protection
                        • The facts
                          • The implications
                            • Point-of-departure sales could serve the forgetful and the fearless
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • Muted growth in market value in 2015
                                    • Claims volumes slide but costs are on the rise
                                      • Growth in the number of holidays is limited
                                      • Market Size and Forecast

                                        • Muted growth in market value in 2015
                                          • Figure 12: Travel insurance gross written premium and claims incurred/loss ratio, 2011-15
                                        • Average premiums grow and single trip insurance shows a slight upturn
                                          • Figure 13: Travel insurance volume, value and average premium, by cover type, 2011-14
                                          • Figure 14: Proportion of annual vs single-trip travel insurance policies, by GWP, 2011-14
                                        • Market value to increase by 4.5% by 2020 …
                                          • Figure 15: Forecast of value of gross written travel insurance premiums, 2010-20
                                          • Figure 16: Forecast of value of gross written travel insurance premiums, 2010-20
                                        • …and policy volume will slip further before recovering
                                          • Figure 17: Forecast of volume of travel insurance policies, 2010-20
                                          • Figure 18: Forecast of volume of travel insurance policies, 2010-20
                                        • Forecast methodology
                                        • Claims Patterns

                                          • Total claims costs have steadily decreased
                                            • Figure 19: Cost of travel insurance claims incurred, by type of claim, 2011-14
                                          • Only baggage and money claims grew in number during 2014
                                            • Figure 20: Number of travel insurance claims incurred, by type of claim, 2011-14
                                          • Claims success rates show the majority of claims are paid
                                          • The Overseas and Domestic Travel Market

                                            • Two thirds have holidayed in the UK in the past year
                                              • Figure 21: Holiday destinations visited in the past 12 months, November 2015
                                            • Growth in the number of holidays is limited
                                              • Figure 22: Estimated total holiday market, volume, value and average spend, 2010-20
                                            • Global migration is driving an increase in visits abroad
                                              • Figure 23: UK residents’ visits abroad, by purpose of visit, 2011-14
                                          • Key Players – What You Need to Know

                                            • AXA leaves rivals behind at the top of the market
                                              • Mobile presents a clear opportunity to differentiate
                                                • Saga and Staysure battle it out for dominance among older customers
                                                  • Brand research reveals the strength of Post Office
                                                  • Underwriter Share

                                                    • AXA returns to growth at the top of the market
                                                      • Figure 24: Leading travel insurance underwriters, by GWP (UK business only), 2012-14
                                                  • Competitive Strategies

                                                    • Making the most of mobile
                                                      • ACE Group
                                                        • ERV
                                                          • Distribution shifts as insurers look beyond the aggregators
                                                            • Columbus Direct
                                                              • Staysure
                                                                • Growing over-50s market attracts strategic investment
                                                                  • Talk to TIM
                                                                    • Swinton
                                                                    • Advertising and Marketing Activity

                                                                      • Insurers scale back their use of direct mail
                                                                        • Figure 25: Recorded above-the-line, online display and direct mail advertising expenditure on UK travel and sports insurance, by media type, 2012/13-2014/15*
                                                                      • Staysure invests heavily to rival Saga for older customers
                                                                        • Figure 26: Top 8 advertisers of travel and sports insurance, by recorded above-the-line, online display and direct mail advertising, by media type, 2012/13-2014/15*
                                                                      • Search and social media are growing in importance
                                                                        • Nielsen Media Research coverage
                                                                        • Brand Research

                                                                            • What you need to know
                                                                              • Brand map
                                                                                • Figure 27: Attitudes towards and usage of selected finance brands, November 2015
                                                                              • Key brand metrics
                                                                                • Figure 28: Key metrics for selected finance brands, November 2015
                                                                              • Brand attitudes: AXA and Aviva lead the way with reputation for quality
                                                                                • Figure 29: Attitudes, by brand, November 2015
                                                                              • Brand personality: Advertising has helped Direct Line invigorate its brand
                                                                                • Figure 30: Brand personality – Macro image, November 2015
                                                                              • Sainsbury’s and Tesco are struggling to get their finance message across
                                                                                • Figure 31: Brand personality – Micro image, November 2015
                                                                            • Brand Analysis

                                                                              • Retailer brands lack clarity when it comes to finance
                                                                                • Saga and Staysure brands are driven by standard of service
                                                                                  • Longstanding insurers inspire confidence
                                                                                    • The Thomas Cook brand is under pressure
                                                                                      • Post Office stands out from rivals with recent rebrand
                                                                                      • The Consumer – What You Need to Know

                                                                                        • 84% had insurance cover for their last holiday abroad
                                                                                          • Direct channel is a close second behind the aggregators
                                                                                            • One in 10 holidaymakers arranged their insurance using a smartphone or tablet
                                                                                              • Two thirds arranged their insurance within a month of departure
                                                                                                • Protection against failure of travel companies is key for customers
                                                                                                  • 45% of people are interested in managing claims using their smartphone
                                                                                                  • Travel Insurance Cover for Last Holiday Abroad

                                                                                                    • 84% had insurance cover for their last holiday abroad
                                                                                                      • Figure 32: Travel insurance cover for last holiday abroad, November 2015
                                                                                                    • Youngest travellers are least likely to arrange protection
                                                                                                      • Figure 33: Proportion of people who had any travel insurance cover for their last holiday abroad, by age, November 2015
                                                                                                  • Type of Travel Insurance Provider for Last Holiday Abroad

                                                                                                    • Direct channel takes close second behind comparison sites
                                                                                                      • Figure 34: Travel insurance provider for last holiday abroad, November 2015
                                                                                                    • Post Office has garnered a following among Millennials
                                                                                                      • Figure 35: Travel insurance provider for last holiday abroad, by generation, November 2015
                                                                                                  • Method of Arranging Policy

                                                                                                    • One in 10 holidaymakers arranged their insurance using a smartphone or tablet
                                                                                                      • Figure 36: Method of arranging insurance for last holiday abroad, November 2015
                                                                                                    • One in five over-55s arranged insurance by phone
                                                                                                      • Figure 37: Proportion of people who arranged the travel insurance for their last holiday by phone, by age, November 2015
                                                                                                  • Timeframe for Arranging Policy

                                                                                                    • Two thirds arranged their insurance within a month of departure
                                                                                                      • Figure 38: Travel insurance arrangement timeframe for last holiday abroad, November 2015
                                                                                                    • Millennials are most likely to leave insurance until the last minute
                                                                                                      • Figure 39: Travel insurance arrangement timeframe for last holiday abroad, by age, November 2015
                                                                                                  • Attitudes towards Travel Insurance

                                                                                                    • Travel insurance suffers from an overriding sense of obligation
                                                                                                      • Struggle to see value in annual policies
                                                                                                        • Airport kiosks will need to convince people they offer value for money
                                                                                                          • Figure 40: Attitudes towards travel insurance, November 2015
                                                                                                      • Most Important Factors in Choosing a Policy and Provider

                                                                                                        • Price and level of cover strike an uneasy balance for customers
                                                                                                          • Figure 41: Most important factors in choosing a travel insurance policy and provider, November 2015
                                                                                                        • Quality factors gain importance as customers age
                                                                                                          • Figure 42: Most important factors in choosing a travel insurance policy and provider, by age, November 2015
                                                                                                      • Interest in Different Aspects of Cover

                                                                                                        • Protection against failure of travel companies is key for customers
                                                                                                            • Figure 43: Interest in different aspects of cover, November 2015
                                                                                                          • Millennials more likely to lack interest in cover specifics
                                                                                                            • Figure 44: Interest in different aspects of cover, by generation, November 2015
                                                                                                        • Most Useful Mobile App Features

                                                                                                          • 45% of people are interested in managing claims using their smartphone
                                                                                                            • Figure 45: Most useful mobile app features, November 2015
                                                                                                        • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                            • Abbreviations
                                                                                                              • Consumer research methodology
                                                                                                              • Appendix – Market Size and Forecast

                                                                                                                  • Figure 46: Forecast of value of gross written travel insurance premiums, 2015-20
                                                                                                                  • Figure 47: Forecast of volume of travel insurance policies, 2015-20
                                                                                                                • Forecast methodology
                                                                                                                  • Fan chart explanation

                                                                                                                  Companies Covered

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

                                                                                                                  Travel Insurance - UK - February 2016

                                                                                                                  £1,995.00 (Excl.Tax)