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Travel insurance refers to the risk associated while traveling such as injury or death, loss of luggage, delays, and others. It provides numerous benefits such as trip cancellation, loss of luggage & travel documents etc.
Growing tourism is the key factor driving the travel insurance market in addition to increasing government initiative, for instance, to visit some countries such as Luxembourg, the United States, Belgium, France, and others it is mandatory to have travel insurance to obtain VISA.
Various factors that are driving the growth in the market includes increased penetration of smartphones and internet for purchase of online travel insurance through company website and airlines websites.
In addition, rising disposable income, extensive holiday coverage and online travel bookings also contributes towards its growth. Whereas, low consumer experiences in terms of coverages, lack of awareness related to travel insurance policies, premium rates of travel insurance are some factors hindering the market growth over the forecast period.
On the contrary, technological developments such as global positioning system (GPS), data analytics, artificial intelligence (AI), application program interface (API) and geo-location among others is a major opportunistic scope for the market players operating in the global travel insurance market.
COVID-19 has severely affected travel insurance providers as most of the countries closed their borders in order to combat its spread.
Industry giants such as Zurich Insurance Group reported a 40% decline in their profits due to reduced demand for travel insurance caused by a sharp decline in sales at Cover-More, alongside reduced life insurance operations due to adverse disability claims, effected a 56-per-cent decline in the company’s earnings for its Asia-Pacific business.
Overall, the virus wiped out around USD 686 million from its profits as compared to last year due to the imposition of travel restrictions across the world.
As the outbreak of the virus is controlled and people are resuming back to work, most of the travel insurers are starting to offer cover for COVID-19 to provide a reassurance to the travellers that they are looking for during the trip.
Saga, a UK based specialist insurer introduced cover for the treatment of the disease abroad and repatriation to UK as standard on its travel insurance policies for all trips from June-1.The company had refunded around USD 54 million of advance payments to customers whose travel was interrupted by the outbreak and such changes were introduced to provide certainty to the customers who plan to visit after the lock down restrictions were lifted .
In order to reduce its impact, companies have also introduced new travel insurance policies that takes into consideration road trips that would become a necessity till the virus is controlled. Seven Corners, a company in US launched an insurance policy named as ARMOR that provides an annual subscription which can be applied to any road trip and provides benefits such as returning a passenger, motorcycle or a car during road trips.
In order to safeguard their interest, most of the companies have introduced dynamic premiums in order to compensate for the risk involved in the travel. For Example, in case a person wants to visit USA, premiums could be high as compared to travel to South Asia countries where the risk of the disease is less.
Two types of travel insurance policies which are expected to be offered after the pandemic includes
Cancel for any reason” travel insurance is more expensive than standard “named perils” travel insurance, it is more flexible. Its main benefit is that if one changes his mind about the trip, the policy guarantees a minimum of 75% of money would be refunded.
Covid-19 insurance plans are gradually joining passports as holiday must-haves, generating opportunities for insurers. Countries need mandatory coverage in case tourists become sick from the coronavirus. More than a dozen nations, ranging from Aruba to Thailand, require tourists to have Covid-19 coverage, with Jordan being the most recent to accept such safeguards.
A travel insurance package that covers trip safety, medical expense coverage for Covid-19, and luggage and personal effects coverage usually costs 4% to 8% of the trip’s dollar value. Many of the biggest providers such as AXA Assistance USA, Berkshire Hathaway Protection Plan, Seven Corners and Generali have changed their policies to consider contracting Covid-19 unforeseen, like any other illness or virus.
Although the pandemic continues, vaccines are now being administrated around the world, several countries began to reopen travel and tourism. The CDC’s (Centers for Disease Control and Prevention US) new rule on January 26, 2021 – all air passengers who arrive in the U.S. from a foreign country must get tested for Covid no more than three days before their flights depart and report must be negative. This hasn’t slowed down U.S. travellers who plan to travel internationally. Younger travellers are the biggest travel insurance buyers—for now. Travel to Italy and the Netherlands remains highly restricted till now.
The global travel insurance market size is estimated at $XX Billion in 2020, growing at –% CAGR till 2025
The key players in the travel insurance market are Allianz Group, American International Group Inc., Association Generali S.P.A, AXA, Insure and Go Insurance Services Limited, Seven Corners Inc., Travel Insured International, Travel Safe Insurance, USI Insurance Services, and Zurich Insurance Co. Limited.
These players have adopted various strategies to increase their market penetration and strengthen their position in the industry.
AXA:
French Insurance Company revealed a new program AXA Go in China to provide travel insurance via WeChat a Chinese messaging application.25th January 2019, FWD insurance launches a new 24/7 travel insurance chatbot for providing assistance for the entire process of calming travel insurance
Allianz:
It launched critical temporary accommodations in 2020 to assist travellers who became ill with COVID either before or during their journey. When a customer’s trip was cancelled by their travel supplier due to COVID, the company allowed them to cancel their travel insurance policy and receive a full refund. Allianz is proposing product changes for 2021 that will give customers the confidence they need to book their next trip, offering the travel industry a much-needed boost as it looks to turn the corner. It offers extensive coverage for frequent travelers with a low cost-per-trip. Get the best coverage from the AllTrips Executive plan. Individual trip coverage is also available.
AIG:
It is one of the nation’s biggest sellers of travel insurance by premium volume. It is facing fourth-quarter underwriting losses of $178 million tied to Covid-19, primarily related to travel insurance, event-cancellation insurance and reinsurance