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UK Travel Insurance: Market Dynamics and Opportunities

UK Travel Insurance: Market Dynamics and Opportunities

Summary

The UK travel insurance market is very competitive – unlike other lines where a select few providers have a wider customer base than others. This has resulted in a finely priced market in which rates are set to cover claims inflation. However, the extent of hardening will be limited by competition and the amount of choice available to consumers.

Synopsis

  • Gain an insight into the factors driving the travel insurance market and its dependence on the prosperity of the economy.
  • A comparative study of single-trip and annual policies, and the channels affecting the distribution of these products.
  • Discover how the socio-political situations in certain destinations are a cause for concern for insurers as well as holidaymakers.
  • An analysis of the profit/loss ratios in the market and what this means for insurers and consumers alike.
Reasons To Buy
  • Is the travel insurance market profitable for insurers?
  • Why are banks and building societies popular for distributing annual policies?
  • How is the British pound faring against the currencies of some of the world's top travel destinations?
  • Why are older travelers now considered to be a target demographic, despite being a greater risk to insurers?
Key Highlights

Insurers are making small sums of money from the market and it has remained this way for several years after its peak in 2010. The market is interlinked with the economy and the levels of disposable income consumers have to spend on travel.

Travel insurance is often bought for a specific trip or to cover several planned trips. Consumers risk wasting an annual policy or letting it lapse if they do not have sufficient travel planned for the remainder of the policy term.


  • Executive Summary
    • The market saw a decline in revenues despite a surge in holidaymakers
    • Key findings
    • Critical success factors
  • Market Dynamics
    • Introduction
    • The market has contracted but remains profitable
      • The UK travel insurance market reported a drop in value in 2014
      • Rate increases have been limited to covering claims inflation
        • Table UK travel insurance market GWP (£000s) and annual growth (%), 2010-14
    • Insurer profit margins are being squeezed despite the absence of major incidents
      • Profit levels remain restricted as overseas tourism increases
      • Fewer claims have seen insurer losses subside before rising again in 2014 as the market picked up
    • Most claims are a result of medical issues
    • Some destinations are hazardous for both insurers and customers
      • The socio-political climate of a country is now a cause for concern for holidaymakers
      • Exchange rates can dictate the financial requirements for holidaying in certain locations
        • Table British pound exchange rate against the currencies of the top 10 global holiday destinations, 2011.15
    • Banking providers offering cover are changing the shape of the industry
      • More consumers are turning to the banking channel to obtain annual policies
      • Fewer consumers are going to the open market to purchase travel insurance
      • There is no customer loyalty in the travel insurance market
      • Some customers are willing to risk traveling without insurance
      • There is still no compromise between annual and single-trip policies
      • Travel insurance providers can increase the variation of their products to cater to a wider market
    • Overseas travel by UK consumers continues to rise
      • Both visits and expenditure abroad increased in 2014
        • Table Number of visits (000s) and expenditure (£m) abroad by UK residents, 2010-14
      • The number of consumers going on multiple holidays a year continues to increase
        • Table Number of times consumers traveled abroad on holiday in one year (% of survey respondents), 2012-14
      • Total overseas trips continued to grow in 2014
        • Table Number of overseas trips by purpose (000s), 2010-14
      • More insurers are beginning to target the older traveler segment
        • Table Number of times consumers traveled abroad on holiday in the previous 12 months by age (% of survey respondents)
    • The market will show incremental growth as the economy enters full recovery
      • The travel insurance market is forecast to grow by 0.5% in 2015
        • Table UK travel insurance market GWP (£000s) and annual growth rate (%), 2010-19f
      • Economic recovery will boost demand for travel insurance
        • Table Real household disposable income (% annual change) and unemployment rate (%), 2005-14
      • Political unrest in Greece may have implications for the travel insurance market
      • Countries classed as hazardous may cause premiums to spike
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • COR
      • Gross premium
      • Net premium
    • Methodology
      • Market sizing methodology
      • Primary and secondary research
      • Verdict Financial's 2014 UK General Insurance Consumer Survey
    • Bibliography
    • Further reading

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