2021
9
UK Travel Insurance Market Report 2021
2021-03-10T03:02:09+00:00
OX1042501
2195
135384
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Report
en_GB
“COVID-19 has dealt a heavy blow to the travel insurance market, shrinking it by around half in 2020. The previously-unimaginable disruption to the travel sector is expected to extend well…

UK Travel Insurance Market Report 2021

£ 2,195 (Excl.Tax)

Description

Providing the most comprehensive and up-to-date information and analysis of the UK Travel Insurance market, including the behaviours, preferences and habits of the consumer.

The COVID-19 restrictions on both international and domestic travel caused massive disruption for the travel insurance market in 2020, with its value falling by 51%. However, these restrictions have also created some interesting market opportunities for travel insurance companies.

With the pandemic still ongoing and lockdowns slowly being lifted, COVID-related risks are now the top priority for 58% of the target customer base, a huge shift away from the previous main purchase driver of ‘price’ (which now makes up 44%).

Due to the international lockdowns across the world, overseas holidays fell by 78% – 79%, as well as major decreases in travel insurance sales and renewals. Because of the continued travel uncertainty heading into 2021, there may be an increase in domestic travel among customers looking to take short breaks in the UK.

This report covers how the COVID-19 pandemic has affected the UK Travel Insurance market, as well as it’s long term recovery. While it may take years for the market to return to pre-pandemic levels, the domestic market may recover much faster than the international market, with the ‘next normal’ offering opportunities for product development and innovation.

Quickly understand

  • The impact of COVID-19 on the travel insurance market and consumer behaviour.
  • Future travel insurance intentions.
  • Past and future policy preferences.
  • Important factors when buying travel insurance.
  • Perceptions of different types of travel insurance providers.

Covered in this report

Travel Insurance Companies: Staysure, Avanti Travel Insurance, Aviva, Direct Line, AllClear Insurance Services, Saga Services, Insure & Go, Post Office, TUI, Hays Travel, tifigroup, Churchill, insurefor.com, Leisureguard, AXA Partners, Jet2, Boots, ensure, Alpha Travel Insurance, LV=, Holidaysafe.

Expert analysis from a specialist in the field

Written by Irene Salazar, a leading analyst in the Financial Services sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

COVID-19 has dealt a heavy blow to the travel insurance market, shrinking it by around half in 2020. The previously-unimaginable disruption to the travel sector is expected to extend well into 2021 and, together with the economic slowdown, has dampened hopes of a quick bounce back. The recovery period will see rising premiums, a renewed interest in quality over price, a rethink of the potential of policies for domestic travel and cost-saving innovations that improve the customer journey.

Irene Salazar
Senior Financial Services Analyst

Table of Contents

  1. Overview

    • Key issues covered in this Report
    • COVID-19: Market context
    • Impact of the January lockdown and the vaccination rollout
    • Economic and other assumptions
    • Products covered in this Report
  2. Executive Summary

    • Impact of COVID-19 on travel insurance
      • Figure 1: Short-, medium- and long-term impact of COVID-19 on travel insurance, February 2020
    • The market
    • Value of travel insurance market expected to have fallen by 51% in 2020
      • Figure 2: Forecast of gross written travel insurance premiums, 2015-25
    • Single-trip segment grew strongly in 2019
    • Cancellations accounted for 38% of the total value of claims in 2019
    • Recovery of overseas holiday market not expected until 2025
    • EHIC replaced by GHIC as part of Brexit deal
    • COVID-19: FCA introduces temporary guidelines to support customers
    • Companies and brands
    • Heavy losses will squeeze margins…
    • …with focus likely to shift from price to quality
    • A chance for specialists to stand out from the crowd
    • Opportunities and partnerships to be found with new players
    • Industry and individual providers will face greater scrutiny
    • Advertising will be key in the recovery period
      • Figure 3: Total above-the line, online display and direct mail advertising expenditure on travel insurance, 2016-20
    • The consumer
    • Confidence mimics lockdown dynamics
      • Figure 4: Actual and planned holiday booking activity, January 2016-January 2021
    • Appetite for future trips remains high and domestic trips could be key for growth
      • Figure 5: Travel activity, December 2020
    • Many people could be un- or underinsured in a future trip
      • Figure 6: Likelihood of buying travel insurance for next trip, December 2020
    • Timing will be key for cover against cancellations
      • Figure 7: Preferred timing to arrange travel insurance, December 2020
    • 9% went on their last trip without insurance
      • Figure 8: Insurance cover for last trip abroad, December 2020
    • Majority would opt for single-trip policies amid uncertainty
      • Figure 9: Preferred type of policy for next trip, December 2020
    • Cover for COVID-related risks is more important than price
      • Figure 10: Important features when buying travel insurance, December 2020
    • Convenience and accessibility can be key for last-minute trips
      • Figure 11: Perceptions of type of insurance providers, December 2020
  3. Issues and Insights

    • COVID-19 is an acid test of the travel insurance market
    • Single-trip policies could become more popular as travel starts to recover
    • An opportunity to rethink the role of travel insurance for domestic trips
  4. The Market – Key Takeaways

    • COVID-19 shrinks travel insurance market by half
    • Single-trip segment set to grow as people take fewer trips
    • Cancellations will account for a much higher share of claims
    • Recovery of overseas holiday market not expected until 2025
    • FCA guidelines to support consumers during pandemic puts pressure on margins
  5. Market Size and Forecast

    • COVID-19 derails the travel insurance market
      • Figure 12: Short-, medium- and long-term impact of COVID-19 on travel insurance, February 2020
    • Value of travel insurance market expected to have fallen by 51% in 2020
      • Figure 13: Total value of travel insurance policies sold, by gross written premium, 2015-20
    • Market expected to remain below pre-COVID-19 levels
      • Figure 14: Forecast of gross written travel insurance premiums, 2015-25
      • Figure 15: Forecast of gross written travel insurance premiums, 2020-25
    • Market drivers and assumptions
      • Figure 16: Key drivers affecting Mintel’s forecasts (prepared on 25 November 2020), 2015-25
    • Learnings from the last recession
      • Figure 17: Travel insurance gross written premiums, 2006-11
    • Forecast methodology
  6. Market Segmentation

    • Single-trip segment grew strongly in 2019
    • Multi-trip segment accounted for majority of the market in 2019
      • Figure 18: Segmentation of travel insurance market, by policy type, ABI members only, 2015-19
    • Average premiums grew in 2019
      • Figure 19: Average travel insurance premium, by policy type, ABI members only, 2010-19
    • Average premiums and claims vary greatly by age
      • Figure 20: Average travel insurance premium, by age, 2019
      • Figure 21: Average travel insurance premium, average claim value and claims frequency, by age, 2018
  7. Claims Costs Incurred

    • Volume and value of claims fell in 2019…
      • Figure 22: Total volume and value of travel insurance claims incurred (ABI members only), 2015-19
    • …reflecting fall in medical expenses claims
      • Figure 23: Volume and value of medical expenses claims incurred on travel insurance policies (ABI members only), 2015-19
    • Medical expenses accounted for more than half of claim costs in 2019
      • Figure 24: Proportional distribution of travel insurance claims costs, by type of claim, 2019
  8. Market Drivers

    • COVID-19 grinds overseas travel to a halt…
      • Figure 25: Main visit and spending estimates for UK residents’ visits abroad, April-June 2020
    • …with recovery not expected until 2025
      • Figure 26: UK residents’ visit estimates abroad by region and reason for visit, April-June 2020
    • Growth in number of trips abroad had slowed down pre-COVID-19
      • Figure 27: Number of overseas visits by UK residents, by purpose of visit, 2015-19
    • Choice of destination will be highly linked to distance and restrictions
      • Figure 28: Number of overseas visits by UK residents, by region of visit, 2015-19
    • COVID-19 is likely to reverse trends on duration of stay abroad
      • Figure 29: Overseas visits by UK residents, by length of stay, 2009-19
  9. Regulatory Environment

    • EHIC replaced by GHIC as part of Brexit deal…
    • …with further agreements under discussion
    • COVID-19: FCA introduces temporary guidelines to support customers
  10. Companies and Brands – Key Takeaways

    • Heavy losses will squeeze margins…
    • …with focus likely to shift from price to quality
    • A chance for specialists to stand out from the crowd
    • Opportunities and partnerships to be found with new players
    • Industry and individual providers will face greater scrutiny
    • Advertising will be key in the recovery period
  11. Competitive Strategies

    • Heavy losses will continue in the near future
    • Insurers pledge to treat customers fairly…
    • …but the industry and individual providers will face greater scrutiny
    • Industry’s initial reaction involved pulling products from the market
    • Competition will increase in some sectors of the market…
    • …with new opportunities for specialists
    • Future pricing: no longer a race to the bottom?
    • Competition and partnership opportunities will come from new players
    • Cost-saving innovations and an accelerated shift to digital customer service
    • COVID-19 exposes a market that is slow to change and adapt
    • How brands are responding: tifgroup case study
  12. Advertising and Marketing Activity

    • Advertising in the recovery period
    • ATL adspend falls sharply in 2020
      • Figure 30: Total above-the line, online display and direct mail advertising expenditure on travel insurance, 2016-20
    • Top six spenders account for 91% of ATL adspend
      • Figure 31: Top six travel insurance advertisers (above-the-line, online display and direct mail advertising only), 2018-20
    • Press and direct mail are the preferred channels for advertising
      • Figure 32: Total above-the line, online display and direct mail advertising expenditure on travel insurance, by media type, 2018-20
    • Nielsen Ad Intel coverage
  13. The Consumer – Key Takeaways

    • COVID-19 upheaval will create new opportunities for last-minute travel insurance
    • Appetite for future trips remains high and UK-only trips could be key for growth
    • Majority would opt for single-trip policies amid uncertainty
    • Cover for COVID-related risks is more important than price
    • Last-minute trips could boost sales for travel companies and retailers
  14. Impact of COVID-19 on Consumer Behaviour

    • Holiday booking plans remains well below pre-pandemic levels
      • Figure 33: Actual and planned holiday booking activity, January 2016-January 2021
    • Consumers will want to make the most of future holidays
      • Figure 34: Impact of COVID-19 on household expenditure on holidays, 4-12 February 2021
    • Overall consumer confidence mimics virus trajectory and lockdown restrictions
      • Figure 35: The Financial Confidence Index, January 2016-January 2021
  15. Travel Activity and Intentions

    • Appetite for future trips remains high
      • Figure 36: Future travel intentions, December 2020
    • A quarter of people expect to stick to the UK…
      • Figure 37: Travel activity, December 2020
    • …increasing to 37% of young couples with children
      • Figure 38: Travel Insurance – CHAID – Tree output, December 2020
  16. Future Travel Insurance Intentions

    • Many people could be un- or underinsured in a future trip
      • Figure 39: Likelihood of buying travel insurance for next trip, December 2020
    • Opportunity for UK-focused policies
      • Figure 40: Likelihood of buying travel insurance for next trip, by destination of future trips, December 2020
    • Timing will be key for cover against cancellations
      • Figure 41: Preferred timing to arrange travel insurance, December 2020
  17. Past and Future Policy Preferences

    • 9% went on their last trip without insurance
      • Figure 42: Insurance cover for last trip abroad, December 2020
    • 21% already had cover in place
    • Majority would opt for single-trip policies
      • Figure 43: Preferred type of policy for next trip, December 2020
    • But most people are likely to stick to their existing preferences
      • Figure 44: Preferred type of policy for next trip, by type of policy used for last trip, December 2020
  18. Important Factors when Buying Travel Insurance

    • Cover for COVID-related risks is more important than price…
      • Figure 45: Important features when buying travel insurance, December 2020
    • …but the market will remain very competitive in the recovery period
    • Flexibility will resonate with consumers
    • COVID-related cover and basic factors are enough to attract 90%
      • Figure 46: Important features when buying travel insurance – TURF Analysis, December 2020
  19. Perceptions of Different Types of Travel Insurance Provider

    • Traditional insurers are seen as reliable
    • Specialists are perceived as expert and reassuring
      • Figure 47: Perceptions of type of insurance providers, December 2020
    • Convenience and accessibility can be key for last-minute trips
    • Current account providers could attract the unconvinced
  20. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
    • CHAID analysis methodology
      • Figure 48: Travel Insurance – CHAID – Table output, December 2020
    • TURF analysis methodology
      • Figure 49: Important features when buying travel insurance, TURF Analysis, December 2020

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This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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