In 2016, the UK travel insurance market experienced a decrease of 18% in the number of policies being written, which resulted in GWP dropping 9%. Profitability within the market has remained low despite a slight increase in travel insurance premiums, as the number of UK residents visiting abroad without travel insurance increases. With the overwhelming majority of visits abroad by UK residents being to Europe and the number of visits to this region increasing in 2016, the downturn in policy uptake by UK travelers could be explained by reliance upon the European Health Insurance Card (EHIC) system.
Cost of claims for travel insurers increased in 2016 to £368.5m, despite the total number of claims falling almost 3% according to Association of British Insurers (ABI) data. Medical expenses remain the largest cost to travel insurers, with the cost of cancellations also increasing by 2%. The increased costs are partly due to the continued volatility in the value of the pound in the foreign exchange markets, combined with inflation in the cost of medical treatments.
Critical success factors include in this report:
- The travel insurance industry must ensure accurate pricing of premiums in the future years. With profitability limited, the providers must be certain policies are accurately priced and account for the volatility of currencies - an issue that has increased in significance since the UK’s vote to leave the EU - in order to remain profitable.
- The application of new technologies will allow for significant developments within the travel insurance market. Continued developments are set to allow for the cost of medical expense-related claims to decrease. Technological advances will enable preemptive medical treatment to occur before a traveler becomes seriously ill, reducing the costs associated with medical claims for insurers.
Companies mentioned in this report: ABI, AXA, Chubb, App in the Air, Direct Line Group, Aviva, HSBC, Direct Line Group, ACE European Group, Ageas, Bupa Insurance, LV=, AIG Europe, AmTrust
- The travel insurance market may potentially benefit as a result of the UK leaving the EU.
- Marginalized consumers require more guidance in order to access the market.
- The UK travel insurance market is set to be worth £702m in 2021.
- Benchmark yourself against the rest of the market.
- Ensure you remain competitive as new innovations and insurance models begin to enter the market.
- Be prepared for how travel trends and the UK travel insurance market will be impacted by socio-political and economic factors over the next few years.
1.1. Market summary
1.2. Key findings
1.3. Critical success factors
2. MARKET DYNAMICS
2.2. UK travel insurance market GWP declines further
2.2.1. Multi-trip policies continue to increase their share of market GWP
2.2.2. The number of policies written in 2016 declined
2.2.3. Average travel insurance premiums increased
2.2.4. The influence of age on premium prices
2.3. Travel insurance and added-value accounts
2.3.1. Added-value accounts remain popular with travelers
2.3.2. The disadvantages of added-value account travel insurance policies
2.3.3. Travel insurance complaints are on the rise
2.4. Travel trends among UK residents
2.4.1. Travel abroad by UK residents continued to increase in 2016
2.4.2. Holidays remain the main purpose of traveling abroad
2.5. The influence of economic, socio-political, and health events on travel
2.5.1. The state of the UK economy has an impact on travel
2.5.2. The influence of exchange rates on trips abroad by UK residents
2.5.3. Social unrest in travel destinations
2.5.4. Increased prevalence of the Zika virus
2.6. Travel insurance claims
2.6.1. The number of travel insurance claims continues to fall
2.6.2. Medical expenses continue to drive up total claims costs
2.6.3. Changes in booking culture could reduce the cost of cancellations
3. COMPETITOR DYNAMICS
3.1. AXA leads the way in the travel insurance space
3.1.1. AXA accounts for almost a fifth of the market
3.1.2. Direct Line Group is not far behind AXA
3.1.3. Aviva extends HSBC agreement
4. THE MARKET GOING FORWARD
4.1. Market forecasts
4.1.1. Current market forecast: UK travel insurance will experience modest growth
4.1.2. Market forecast: smooth Brexit process
4.1.3. Market forecast: hard Brexit process
4.2. Uncertainty in the UK economy
4.2.1. How the UK economy copes with Brexit is key for the travel market
4.3. Technology will influence the travel insurance market
4.3.1. Wearable tech could play a role in prevention
4.3.2. Virtual GP services could become commonplace
4.3.3. The development of flight delay policies
4.4. The FCA calls for input from the insurance industry
5.1. Abbreviations and acronyms
5.4. Further reading
List of Tables
Table 1: UK travel insurance market GWP and annual growth rate, 2012-16
Table 2: HHI, 2012-15
Table 3: Share of UK travel insurance market GWP by policy type, 2012-16
Table 4: Number of travel insurance policies written, 2010-16
Table 5: Average premiums and percentage change by policy type, 2012 -16
Table 6: Average premium prices by demographic, 2014-16
Table 7: Number of overseas visits by purpose (000s), 2014-17
Table 8: Number of visits by UK residents to Zika-affected countries (000), 2012-16
Table 9: Historical exchange rates relative to £1, 2013-17
List of Figures
Figure 1: The UK travel insurance market declined further in 2016
Figure 2: Multi-trip policies continue to increase their share of GWP
Figure 3: The number of policies written declined in 2016
Figure 4: Average multi-trip policy premiums increased dramatically in 2016
Figure 5: Europe remains the most popular destination for UK travelers
Figure 6: Holidays remain the main reason for trips abroad
Figure 7: UK economic performance continued to improve in 2016
Figure 8: The value of the pound continues to fluctuate
Figure 9: Terrorist attacks have led to a decline in visits by UK residents to affected destinations
Figure 10: The threat of Zika has led to fewer visits to affected countries
Figure 11: The overall number of claims made continues to fall
Figure 12: Cancellation is the main reason for travel insurance claims
Figure 13: Total claims costs continue to rise, with medical claims leading the way
Figure 14: AXA continues to dominate the travel insurance space
Figure 15: GWP is set to grow steadily year on year