UK Travel Insurance 2009 : Market Research Report

UK Travel Insurance 2009

Published by: Datamonitor

Published: Sep. 16, 2009

Overview
Catalyst
Summary
Executive Summary: The recession has changed consumer attitudes towards travel, resulting in a negative impact on premiums; The travel insurance market grew to £763m in 2008; Consumers have reduced their number of trips abroad due to a tougher economic climate; The level of detected fraud has increased in the UK travel insurance market; Travel insurance providers spent £3m on advertising in the first half of 2009; Marketing and advertising increased to £7.7m in 2008 but fell in the first half of 2009; Direct mail continued to be the dominant form of advertising in H1 2009; The overall number of visits abroad has fallen but consumers have increased their travel to non-European destinations; The number of visits abroad fell to 69 million in 2008; The number of visits abroad fell by 16.6% from Q1 2008 to Q1 2009; A decrease in annual policy sales and strong competition will lead to slower growth in GWP; Sales of annual policies are forecast to fall in 2009, constraining premium income growth; Rates are expected to rise in the market, though strong competition will limit the level of growth achieved
Table of Contents
Table of figures
Table of tables
Market Context
Introduction: The recession has changed consumer attitudes towards travel, placing an impact on premiums; Consumers have reduced their number of trips abroad due to a tougher economic climate; The cost of flying abroad will grow in November 2009 as air passenger duty is increased; Recessionary product innovation and marketing is evident in the travel insurance market; Aggregators are driving price competition in the market but have lost their appeal among insurers; The level of detected fraud has increased in the UK travel insurance market; Travel insurance GWP is estimated to have grown in 2008 despite the recession; The travel insurance market grew to £763m in 2008; The proportion of premium income generated from annual policies grew in 2008; Annual travel insurance premium rates fell significantly in 2008, while single trip prices rose; The number of travel insurance policies sold increased by 10.6% in 2008; The market was profitable in 2008, though claims inflation continued to grow claims costs; The gross loss ratio in the travel insurance market improved in 2008; Claims costs increased despite improving claims frequency; The average cost of a travel insurance claim increased significantly in 2008; Medical expenses continued to constitute the largest cost to the industry; The FSA began regulating travel agencies and airlines selling travel insurance alongside bookings; Five authorized firms have been created since January 2009; The FSA has begun scrutinizing the practice of pre-ticked travel insurance by travel firms and airlines; Insurers have voiced concern over the Equality Bill; Customer Focus; Introduction; The overall number of visits abroad has fallen but consumers have increased their travel to non-European destinations; The number of visits abroad fell to 69 million in 2008; The number of visits abroad fell by 16.6% from Q1 2008 to Q1 2009; More consumers are visiting Asian, Latin American and African countries; Business related travel abroad declined by 1.1% in 2008; The number of holidays taken abroad by UK residents only rose by 0.2% in 2008; Travel insurance providers spent £3m on advertising in the first half of 2009; Marketing and advertising increased by 2% to £7.7m in 2008 but fell in the first half of 2009; Direct mail continued to be the dominant form of advertising in H1 2009; The top 10 travel advertisers collectively spent £2.5m on advertising their products in H1 2009; Direct mail accounted for a significant proportion of the top 10 travel advertisers' budgets in H1 2009; Press advertising was utilized by seven of the top 10 advertisers in H1 2009; Only two players spent on TV advertising and both spent the majority of their budgets on this media; The Post Office significantly increased its advertising spend on travel insurance products in 2008; Competitive Dynamics; Introduction; Corporate partnerships remain a key element of travel insurance distribution in 2009; AXA secured two travel related partnerships in 2009; Mondial Assistance secured a partnership with Expedia.com; FirstAssist partnered with Confused.com; Liverpool Victoria and the Nationwide Building Society entered a new partnership in 2008; Product innovation continues to be a key competitive strategy among travel insurance providers; Equity has launched travel insurance products tailored to travelers diagnosed with cancer; LV= launched a new travel insurance policy in May 2008; Groupama launched a new travel insurance policy for SMEs in January 2008; Insure and Go has launched a green insurance policy that includes carbon offsets; AXA, Aviva, RBS, Fortis and AIG are the top 5 players in the UK travel insurance market; AXA is the clear market leader in UK travel insurance; Aviva and RBS have a strong hold over the number 2 and 3 positions in the market; Munich Re, AIG, Groupama, and BUPA reported growth in their premium income in 2008; Munich Re has achieved significant growth in its travel business and is now closing in on its competitors; AIG and Fortis's market share reached 6.6% in 2008; Groupama, BUPA and RSA also achieved strong growth even though their market shares remained static in 2008; Future Decoded; A decrease in annual policy sales and strong competition will lead to slower growth in GWP; Sales of annual policies are forecast to fall in 2009, constraining premium income growth; Rates are expected to rise in the market, though strong competition will limit the level of growth achieved; The UK travel insurance market is forecast to reach £847m in GWP by 2013; GWP is forecast to contract to £747m in 2009 due to the recession reducing the number of trips abroad; The market will grow to £847m in GWP by 2013
APPENDIX
Supplementary data
Competitive Dynamics
Travel insurance affinity partnerships
Definitions
Brokers
Bancassurers
Brandassurers
Gross written premiums
Geographical areas
Research methodology
Primary research
Market context
Customer focus
Further reading
Ask the analyst
Datamonitor consulting
Disclaimer
List of Tables: Table 1: Travel insurance repudiation rates by volume and value, 2006-08 (%); Table 2: GWP in the travel insurance market, 2004-08 (£000s); Table 3: UK travel insurance GWP split by policy type, 2004-08 (%); Table 4: UK travel insurance premium rates, 2004-08 (£); Table 5: Number of travel insurance policies written, 2004-08 (000s); Table 6: Gross loss ratios by line of business, 2004-08 (%); Table 7: UK travel insurance claims volume, costs and frequency 2004-08; Table 8: UK travel insurance claims by peril 2004-08; Table 9: Number of visits abroad by UK residents, 2004-08 (000s); Table 10: Number of visits abroad by UK residents by quarter, 2006-Q1 09 (000s); Table 11: UK residents' visits abroad by destination, 2004-08 (000s); Table 12: UK residents' visits abroad by reason for travel, 2004-08 (000s); Table 13: Total number of holidays by UK residents, 2004-08 (000s); Table 14: UK travel insurance advertising spend, 2004-H1 2009 (£); Table 15: Top 10 UK travel insurance advertisers by medium, H1 2009 (£); Table 16: Top 10 UK travel insurance advertisers, 2006-H1 2009 (£); Table 17: Top 10 UK travel insurers by GWP, 2008 (£000s); Table 18: Top 10 UK travel insurers by market share, 2008 (%); Table 19: Key variables affecting travel insurance GWP, 2009-13; Table 20: UK travel insurance GWP, 2004-13f, (£000s); Table 21: UK travel insurance competitors by premium income, 2005-08 (£000s); Table 22: Relationships between travel underwriters and major tour operators, 2009; Table 23: Relationships between travel underwriters and online travel agents, 2009; Table 24: Relationships between travel underwriters and low cost airlines, 2009; Table 25: Relationships between travel underwriters and banks and building societies, 2009; Table 26: Relationships between travel underwriters and selected brandassurers, 2009
List of Figures: Figure 1: The number of visits abroad by UK residents has been falling steadily since 2006; Figure 2: Financial failure cover will be appealing to consumers travelling in a recession; Figure 3: Travel insurance repudiation rates have increased by value significantly in 2008; Figure 4: GWP reached £763m in the UK travel insurance market in 2008; Figure 5: The proportion of GWP derived from annual travel policies grew in 2008; Figure 6: Travel insurance premium rates have decreased significantly over the last five years; Figure 7: The number of travel insurance policies sold in 2008 increased to 23.2m; Figure 8: The gross loss ratio in the travel insurance market improved in 2008; Figure 9: Claims inflation drove claims costs up in 2008; Figure 10: Medical expenses constituted the largest cost to the travel insurance industry in 2008; Figure 11: The number of visits abroad by UK residents has been falling steadily since 2006; Figure 12: The number of visits abroad declined significantly between Q1 2008 and Q1 2009; Figure 13: Visits to Australia by UK residents declined in 2008; Figure 14: Business related visits abroad have decreased among UK residents in 2008; Figure 15: Visits abroad remained relatively static in 2008; Figure 16: Spending on outdoor advertising has increased significantly since 2007; Figure 17: Direct mail accounted for more than half the total advertising spend on travel insurance products in H1 2009; Figure 18: Saga spent the most on advertising in the travel insurance market in H1 2009; Figure 19: Equity launched Insureblue which offers tailored travel products to consumers in the UK who have been diagnosed with testicular and prostate cancers; Figure 20: AXA held the largest share in the UK travel insurance market; Figure 21: Travel insurance GWP is forecast to contract in 2009 before growing again thereafter

Abstract

Introduction

This report is an invaluable source of information on the UK travel insurance market. It provides unique market size information and discusses the main challenges and trends facing travel insurance providers. It also analyses which underwriters are leading the way in this market and forecasts what the future holds for the sector over the next four years.

Scope

GWP forecasts to 2013, based on Datamonitor's in-house expertise and proprietary model.
Insight into the main competitive developments taking place in the UK travel insurance market.
A detailed analysis of the marketing spend of the top 10 UK travel insurance advertisers.

Highlights

The number of visits abroad by UK residents decreased by 16.6% between Q1 2008 and Q1 2009, from 18.2 million to 15.2 million. This is considerably different to trends in previous years, which have witnessed consistent growth in the first quarter of each year.

In 2008, advertising expenditure continued to increase in the travel insurance market to £7.7m, which can be attributed to competitors increasing their spending on outdoor advertising. Spending on outdoor advertising displayed significant growth in 2008, with spending on this type of media increasing by 307.3% to £1.3m.

The travel insurance market witnessed a small improvement in its gross loss ratio, which reduced by 0.7 percentage points from 65.4% to 64.7%. Growth in premium income was the main driver of this improvement, which grew by a larger proportion than claims incurred.

Reasons to Purchase

Plan your future travel insurance strategy using Datamonitor's market size forecasts.
Gain an understanding of changing consumer attitudes and behaviors amid the downturn in order to determine appropriate recessionary strategies.
Benchmark your travel insurance business against the competition.

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UK Travel Insurance 2009

Table of Contents

Abstract