Strong recovery for travel insurance after Covid-19
As many travel plans were impacted by the pandemic, GlobalData highlights how travellers now take more into consideration the benefits of travel insurance.
Many travellers are looking to book their next international holiday in 2022, as restrictions ease and travel insurance will emerge as one of the few winners from the Covid-19 pandemic.
A combination of strong PR, positive expert opinion, and the all-important rising consumer demand will undoubtedly make it an indispensable component of trips as the industry continues its resurgence this year.
Travel insurance has become a "must have" product
Although travel companies and industry experts have always advised travellers to purchase travel insurance, less cautious travellers historically ignored this advice and many were never really penalised for it. However, the pandemic’s tumultuous journey over the last two years has made the travel industry unpredictable.
The cancellation and abandonment of trips are now commonplace, whilst a need for medical assistance is now a genuine possibility. There is now a general acceptance from travellers that when they book their holiday, there is a certain probability that they could experience these issues and will need to make a claim.
Consumer sentiment also suggests that travel insurance is a "must have" purchase in today’s marketplace. According to a GlobalData survey, 27% of respondents said that "risk-free products" "always" influence their product choices, with a further 31% saying that it "often" does. This is a major selling point for travel insurance.
With many travellers stung by the pandemic’s impact on previous holiday plans, travel insurance can alleviate the stress of such issues and ensure tourists are not left out-of-pocket due to unforeseen circumstances. As such, the prevalence of quality travel insurance policies will be vital to the tourism industry’s recovery.
Market demand is growing
The continuation of the pandemic will ensure that claims for medical expenses, quarantine, and cancellations will be required for many tourists. According to World First, a UK-based travel insurance firm, the most common travel insurance claims in 2017 were related to trip cancellations (40%) and medical expenses (36%).
It is now fair to assume that in 2022, these statistics will more likely be significantly higher due to the pandemic. As a result, there is an increased demand for travel insurance, which is projected to grow further over the next few years.
According to GlobalData, revenue generated from travel insurance purchases from intermediaries and direct sales increased by 66.4% in 2021. Furthermore, projections show that this will continue to grow by a CAGR of 7.2% between 2022 and 2025. These forecasts reveal a 13.3% growth on the pre-pandemic levels of 2019.
As customers continue to look for peace of mind for their trips, market demand will continue to grow for travel insurance. However, policies must remain fair for consumers moving forwards. Naturally, travel insurance prices will inflate or include extra premiums to help cover Covid-19 claims. As always, these must be communicated effectively to consumers to allow the travel insurance space to prosper.