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Travel Insurance - UK - February 2017

“Travel insurers face a number of key challenges. One of the most important is cost control, against a backdrop of intense price competition and slow market growth. Containing costs has become even more important recently, as a result of higher foreign medical bills linked to a weaker Sterling. At the same time, providers need to constantly remind consumers to consider quality of cover when buying online through a price comparison site, and the importance of answering questions about pre-existing medical conditions honestly.”
– Sarah Hitchcock, Senior Finance Analyst

This Report discusses the following key topics:

  • Scope to expand cover for holiday disruption
  • Non-disclosure of pre-existing medical conditions is a significant problem

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Table of contents

  1. Overview

    • What you need to know
      • Product definitions and Report coverage
      • Executive Summary

          • The market
            • Looking ahead: steady market growth predicted
              • Figure 1: Forecast of gross written travel insurance premiums – Fan chart, 2011-21
            • Annual policies account for the largest proportion of volume sales
              • Trends in the holiday market directly influence sales of travel insurance
                • Continuing upward pressure on claims costs
                  • Regulatory developments
                    • Companies and brands
                      • Top five underwriters controlled 64% of the market in 2015
                        • Figure 2: Market shares of the top five travel insurance underwriters, by premium income, 2015
                      • There are numerous distributors of travel insurance
                        • The consumer
                          • 39% of UK adult internet users have an annual travel policy
                            • Figure 3: Ownership of annual travel insurance, by policy type and regional coverage, November 2013 and November 2016
                          • 82% value the travel insurance element of their current account…
                            • …although 42% have had to buy additional cover in the past
                              • Figure 4: Agreement with statements regarding annual travel policy included with current account, November 2016
                            • 12% of holidaymakers went abroad uninsured last year
                              • Figure 5: Travel insurance arrangements for last holiday abroad, November 2016
                            • 67% of people used a price comparison site when they bought their last travel policy
                              • Figure 6: Usage of price comparison sites during buying process, by type of policy, November 2016
                            • Travel insurance is sold by a wide range of companies
                              • Figure 7: Type of company bought travel policy from, November 2016
                            • Reasonable level of interest in supplier failure cover
                              • Figure 8: Types of cover likely to be interested in when taking next overseas holiday, November 2016
                            • Consumers are not always honest about their health when buying travel insurance
                              • Figure 9: Agreement with statements about pre-existing medical conditions, November 2016
                            • What we think
                            • Issues and Insights

                              • Scope to expand cover for holiday disruption
                                • The facts
                                  • The implications
                                    • Non-disclosure of pre-existing medical conditions is a significant problem
                                      • The facts
                                        • The implications
                                        • The Market – What You Need to Know

                                          • Market growth is likely to be adversely affected by Brexit
                                            • Annual policies account for the largest proportion of volume sales
                                              • More people taking multiple trips drive growth in the holiday market
                                                • Claims costs continue to rise
                                                • Market Size and Forecast

                                                  • The market was worth an estimated £730 million in 2016
                                                    • Figure 10: Estimated value of travel insurance policies sold, by gross written premiums, 2011-16
                                                  • Forecast
                                                    • Figure 11: Forecast of gross written travel insurance premiums – Fan chart, 2011-21
                                                    • Figure 12: Forecast of gross written travel insurance premiums, 2016-21
                                                  • Forecast methodology
                                                  • Market Segmentation

                                                    • There were over 12 million sales of annual travel policies in 2015
                                                      • Figure 13: Segmentation of travel insurance market, by policy type – ABI members only, 2011-15
                                                    • Annual policies tend to be more cost-effective for consumers – providing they make use of them
                                                      • Figure 14: Average travel insurance premium, by policy type, 2011-15
                                                  • Overseas Travel Trends

                                                    • Number of overseas holidays rises again in 2016…
                                                      • …but this is unlikely to be repeated in 2017
                                                        • Figure 15: Number of overseas visits by UK residents, by purpose of visit, 2008-16
                                                      • 80% of trips abroad are to European destinations
                                                        • Figure 16: Number of overseas visits by UK residents, by region of visit, 2012-16
                                                      • 60% of holidays are arranged independently
                                                        • Peak holiday period is July to September
                                                          • Most holidays abroad are between four and 13 nights’ duration
                                                            • Figure 17: Number of visits abroad by UK residents (holiday only), by length of stay, 2012-15
                                                        • Claims Costs and Impact of Brexit

                                                          • Volume of claims may have fallen, but the claims ratio has risen
                                                            • Figure 18: Total volume and value of travel insurance claims incurred, 2011-15
                                                          • Medical inflation remains the number one threat to margins
                                                            • Figure 19: Volume and value of medical expenses claims incurred on travel insurance policies, 2011-15
                                                          • Medical expenses account for the largest proportion of claims costs
                                                            • Figure 20: Proportional distribution of travel insurance claim costs, by type of claim, 2015
                                                          • Brexit impact
                                                            • A weaker Pound will push up claims costs and the price of a holiday abroad
                                                              • Figure 21: Sterling to euro and US Dollar exchange rates (average annual and monthly rates), 2011-16
                                                            • Future of EHICs in doubt
                                                            • Regulatory and Legislative Environment

                                                              • New packaged account rules have improved standards…
                                                                • …with progress made in regards to checking eligibility for travel insurance
                                                                  • Most miss-selling complaints are not upheld
                                                                  • Companies and Brands – What You Need to Know

                                                                    • Top five underwriters held almost two thirds of the market in 2015
                                                                      • There are numerous distributors of travel insurance
                                                                        • Limited above-the-line advertising activity
                                                                          • Insurance brands suffer from low trust levels and customer loyalty
                                                                          • Market Share

                                                                            • AXA is the largest travel underwriter in the UK
                                                                              • Figure 22: Leading travel insurance underwriters, by gross written premiums (UK business only), 2013-15
                                                                            • Significant others
                                                                            • Competitive Strategies

                                                                              • Corporate activity
                                                                                • Recent M&A and rebranding activity
                                                                                  • Distribution partnerships
                                                                                      • Figure 23: Selected distributors of travel insurance and their administration partners/underwriters, January 2017
                                                                                    • New product launches and industry innovation
                                                                                      • Emerald Life launches travel cover for LGBT community
                                                                                        • Columbus Direct installs self-service insurance kiosks in airports
                                                                                          • Thomas Cook offers policyholders a GP app
                                                                                            • New terrorism protection add-on – Safe Journey
                                                                                            • Advertising and Marketing Activity

                                                                                              • Expenditure on above-the-line advertising accounts for a tiny proportion of total premium income
                                                                                                • Figure 24: Top ten travel insurance advertisers (above-the line, online display and direct mail advertising only), 2012-16
                                                                                              • One provider accounted for half of all adspend in the latest year
                                                                                                • TV and direct mail represent the largest share of adspend
                                                                                                  • Figure 25: Proportional distribution of travel insurance adspend (above-the line, online display and direct mail only), by media type, 2012-16
                                                                                                • Nielsen Ad Intel coverage
                                                                                                • Brand Research

                                                                                                    • What you need to know
                                                                                                      • Brand map
                                                                                                          • Figure 26: Attitudes towards and usage of selected brands, December 2016
                                                                                                        • Key brand metrics
                                                                                                          • Figure 27: Key metrics for selected brands, December 2016
                                                                                                        • Brand attitudes: Insureandgo offers “good value”
                                                                                                          • Figure 28: Attitudes, by brand, December 2016
                                                                                                        • Brand personality: Churchill and Virgin Money are among those who have the fun factor
                                                                                                          • Figure 29: Brand personality – Macro image, December 2016
                                                                                                        • Aviva and the AA are the most “reliable” brands
                                                                                                          • Figure 30: Brand personality – Micro image, December 2016
                                                                                                        • Brand analysis
                                                                                                          • Columbus Direct and InsureandGo need to raise brand awareness
                                                                                                            • Protectyourbubble.com and Virgin Money are fun and vibrant brands
                                                                                                              • Zurich stands alone in exclusivity
                                                                                                                • Aviva and the AA are the most competent and reliable
                                                                                                                • The Consumer – What You Need to Know

                                                                                                                  • 39% of UK adult internet users have an annual travel policy
                                                                                                                    • Most customers value the cover they get with their packaged account
                                                                                                                      • In the past year, 12% of holidaymakers went abroad uninsured
                                                                                                                        • Most use a price comparison site and buy online
                                                                                                                          • Many consumers want supplier failure cover
                                                                                                                            • Significant minority of adults choose not to disclose a health condition
                                                                                                                            • Ownership of Annual Travel Insurance

                                                                                                                              • Two in five adults have an annual travel policy
                                                                                                                                • Figure 31: Ownership of annual travel insurance, by policy type and regional coverage, November 2013 and November 2016
                                                                                                                              • Men are more likely to have annual cover than women
                                                                                                                                • 25-34-year-olds are a key target group for packaged account cover
                                                                                                                                • Packaged Account Policyholders – Experiences and Attitudes

                                                                                                                                  • 82% value the travel insurance included in their packaged account…
                                                                                                                                    • …but 42% have had to buy additional cover
                                                                                                                                      • Figure 32: Agreement with statements regarding annual travel policy included with current account, November 2016
                                                                                                                                  • Insurance Arranged for Last Holiday Abroad

                                                                                                                                    • 44% of UK adult internet users went on holiday abroad in the past year
                                                                                                                                      • Figure 33: Holidays taken within the past 12 months, November 2016
                                                                                                                                    • Over the past year, 12% went on holiday without insurance
                                                                                                                                      • Figure 34: Travel insurance arrangements for last holiday abroad, November 2016
                                                                                                                                  • Channels Used to Buy Cover

                                                                                                                                    • Price comparison sites play a hugely influential role in this market
                                                                                                                                      • Figure 35: Usage of price comparison sites during buying process, by type of policy, November 2016
                                                                                                                                    • Numerous distributors create a very competitive marketplace
                                                                                                                                      • Figure 36: Type of company bought travel policy from, by type of policy, November 2016
                                                                                                                                    • Price comparison websites help to drive direct sales of travel insurance
                                                                                                                                      • A significant minority of travel policies are still arranged offline
                                                                                                                                        • Figure 37: Method of buying travel policy, by type of policy, November 2016
                                                                                                                                    • Cover Types Interested In

                                                                                                                                      • Significant consumer interest in supplier failure insurance
                                                                                                                                        • Figure 38: Types of cover expected to be most interested in when taking next overseas holiday – Total sample versus those who took an overseas holiday in the past year, November 2016
                                                                                                                                      • Many consumers are also keen on having disruption cover
                                                                                                                                        • 58% of the over-65s are interested in cover aimed at older consumers
                                                                                                                                          • Other cover types are more niche
                                                                                                                                          • Pre-existing Medical Conditions – Experiences and Attitudes

                                                                                                                                            • 35% have some type of pre-existing medical condition
                                                                                                                                              • Figure 39: Agreement with statements about pre-existing medical conditions, November 2016
                                                                                                                                            • Significant minority have had trouble getting cover for a pre-existing condition
                                                                                                                                              • 19% of annual policyholders would not inform their insurer if they developed a health condition
                                                                                                                                                • Figure 40: Agreement with statement about pre-existing medical conditions – Annual policyholders only, November 2016
                                                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

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

                                                                                                                                                    • Total market sales forecast – Best- and worst-case scenarios
                                                                                                                                                      • Figure 41: Forecast travel insurance gross written premiums – Best- and worst-case scenarios, 2016-21
                                                                                                                                                    • Forecast methodology

                                                                                                                                                    Companies Covered

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

                                                                                                                                                    Travel Insurance - UK - February 2017

                                                                                                                                                    US $2,478.79 (Excl.Tax)