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TRAVEL INSURANCE - UK - FEBRUARY 2018

Published By :

Mintel

Published Date : Feb 2018

Category :

3D

No. of Pages : N/A

The travel insurance industry is driven by intense price competition, as many consumers draw on price comparison websites in order to find the best deal. At the same time, travel insurers are facing increased cost pressures, making it difficult to keep premiums down and maintain comprehensive levels of cover. Insurers can add value by educating consumers as to the benefits of finding balance between the amount of cover required and the price.

Table of contents
OVERVIEW
What you need to know
Products covered in this Report
EXECUTIVE SUMMARY
The market
The market is declining…
…and tough conditions are expected to continue
Figure 1: Forecast of gross written travel insurance premiums – fan chart, 2012-22
Annual policies accounted for four fifths of the market in 2016
Visits to Europe make up 80% of UK travel
Medical inflation continues to threaten margins
Regulatory developments
Companies and brands
Travel insurance specialists had the highest usage
Revolut introduces geolocation travel insurance
Total above-the-line adspend fell by 13% in 2016/17
The consumer
Over a fifth of consumers hold annual travel insurance as part of a current account package
Figure 2: Ownership of annual travel insurance, by policy type and regional coverage, November 2017
Single-trip policies were the most popular for recent holidays
Figure 3: Travel insurance arrangements for last holiday abroad, November 2017
PCWs were used by the majority of people who bought standalone policies
Figure 4: Usage of price comparison websites during buying process, November 2017
Cover for illness/injury was the most popular reason for buying
45% of people bought travel insurance to protect their belongings
Figure 5: Reasons for arranging travel insurance, November 2017
Most consumers are willing to share more information to get the best deal
Figure 6: Willingness to share information with insurance companies, November 2017
Desire for simpler legal terminology
Figure 7: Desire for improvements when arranging travel insurance, November 2017
Price is the most important factor
UK-based customer services are important
Figure 8: Most important factors when arranging travel insurance, November 2017
What we think
ISSUES AND INSIGHTS
Helping consumers to compare more than just price
The facts
The implications
The weak Pound is pressurising insurers
The facts
The implications
Accessing cover
The facts
The implications
THE MARKET – WHAT YOU NEED TO KNOW
The market is declining
Annual policies accounted for four fifths of the market in 2016
Annual policies became more expensive than single policies in 2016
Holiday and social visits increased but business visits shrank
Visits to Europe made up 80% of UK travel
Medical inflation continues to threaten margins
MARKET SIZE AND FORECAST
The market was worth an estimated £653 million in 2017
Figure 9: Estimated value of travel insurance policies sold, by gross written premiums, 2012-17
Forecast
Figure 10: Forecast of gross written travel insurance premiums – fan chart, 2012-22
Figure 11: Forecast of gross written travel insurance premiums, 2017-22
Forecast methodology
MARKET SEGMENTATION
Annual policies accounted for four fifths of the market in 2016
Figure 12: Segmentation of travel insurance market, by policy type – ABI members only, 2012-16
Annual policies became more expensive than single policies in 2016
Figure 13: Average travel insurance premium, by policy type, 2012-16
OVERSEAS TRAVEL TRENDS
Holiday and social visits increased but business visits shrank
Figure 14: Number of overseas visits by UK residents, by purpose of visit, 2008-17
Visits to Europe made up 80% of UK travel
Figure 15: Number of overseas visits by UK residents, by region of visit, 2012-17
4-13 night stays continued to be most popular
Figure 16: Number of visits abroad by UK residents (holiday only), by length of stay, 2012-16
CLAIMS COSTS
Claims volume fell but claims value rose in 2016
Figure 17: Total volume and value of travel insurance claims incurred, 2012-16
Medical inflation continues to threaten margins
Figure 18: Volume and value of medical expenses claims incurred on travel insurance policies, 2012-16
Medical expenses accounted for the majority of claims costs
Figure 19: Proportional distribution of travel insurance claim costs, by type of claim, 2016
MARKET DRIVERS
Exchange rates increased the price of providing insurance
Profit margins are being squeezed
The ABTA is cracking down on sickness scams
Monarch Airlines collapses
Saga hit by airline failure
Turbulence for Ryanair
REGULATORY AND LEGISLATIVE CHANGES
FCA calls for input
FOS upheld 19% of complains in 2016/17
COMPANIES AND BRANDS – WHAT YOU NEED TO KNOW
Travel insurance specialists had the highest usage
Revolut introduces geolocation travel insurance
Total above-the-line adspend fell by 13% in 2016/7
Television and direct mail were the main channels of advertising
MARKET SHARE
Travel insurance specialists were the most popular
Figure 20: Share of providers for travel insurance by type, November 2017
49% of consumers switched provider in the last two years
Current account providers play a significant role
The ageing population
COMPETITIVE STRATEGIES
Aviva offers free European annual multi-trip policies
Zurich bought and sold
Thompson becomes TUI
TIF Group launches Travel Insurance Explained
Avanti bought by Staysure
Revolut introduces geolocation travel insurance
TIF Group launched Postcard Travel Insurance
Staysure introduces ‘end supplier failure’ bolt-on
New insurance app aimed at Millennials
TravelSmart update
ADVERTISING AND MARKETING ACTIVITY
Total above-the-line adspend fell by 13% in 2017
Figure 21: Top ten travel insurance advertisers (above-line, online display and direct mail advertising only), 2012/3-2016/17
Television and direct mail were the main channels of advertising
Figure 22: Proportional distribution of travel insurance adspend (above-the line), by media type, year to October 31 2017
Nielsen Ad Intel coverage
BRAND RESEARCH
What you need to know
The Post Office is seen as the most trusted and differentiated brand
Figure 23: Attitudes towards and usage of selected brands, November 2017
Key brand metrics
Figure 24: Key metrics for selected brands, November 2017
Brand attitudes: Co-op rewards loyalty
Figure 25: Attitudes, by brand, November 2017
Brand personality: Debenhams Personal Finance is most exclusive
Figure 26: Brand personality – macro image, November 2017
The Post Office is seen as the most competent
Figure 27: Brand personality – micro image, November 2017
Brand analysis
The Post Office is seen as the most trusted provider
MORE TH>N, Debenhams and esure need to address customer experiences
Co-op Insurance leads in rewarding loyalty
Thomas Cook is seen as the most fun brand
THE CONSUMER – WHAT YOU NEED TO KNOW
Over a fifth of consumers hold annual travel insurance as part of a current account package.
Packaged current accounts can provide limited cover
Single-trip policies were the most popular for recent holidays
PCWs were used by the majority of people who bought standalone policies
Cover for illness/injury was the most popular reason for cover
Willingness to share information is high across the board
Desire for simpler legal terminology
UK-based customer services are important
POLICY OWNERSHIP
Over a fifth of consumers hold annual travel insurance as part of a current account package
Figure 28: Ownership of annual travel insurance, by policy type and regional coverage, November 2017
53% of people do not have annual travel insurance
Older Millennials are more likely to have cover through their current accounts
INSURANCE ARRANGED FOR LAST HOLIDAY ABROAD
Single-trip policies were the most popular
Figure 29: Travel insurance arrangements for last holiday abroad, November 2017
90% of annual policyholders travelled to Europe
EHICs provide basic cover in Europe
Younger Millennials more willing to travel without cover
USE OF PRICE COMPARISON WEBSITES
PCWs were used by the majority of people who bought standalone policies
Figure 30: Usage of price comparison websites during buying process, November 2017
Widest use of PCWs amongst Millennials
Figure 31: Usage of price comparison websites during buying process, by generation, November 2017
PCW usage was higher among people who went on beach holidays
REASONS FOR PURCHASE
Cover for illness/injury was the most popular reason for cover
Figure 32: Reasons for arranging travel insurance, November 2017
45% of people bought travel insurance to protect their belongings
Cover for political unrest/terrorism
WILLINGNESS TO SHARE INFORMATION
Open Banking presents an opportunity
Figure 33: Willingness to share information with insurance companies, November 2017
People aged 65+ are more willing to share information
DESIRE FOR IMPROVEMENTS
Desire for simpler legal terminology
Figure 34: Desire for improvements when arranging travel insurance, November 2017
The hidden cost of the excess
Most people are happy with the amount of providers
Desire for fewer exclusions in older demographics
MOST IMPORTANT FACTORS
Price is the most important factor
Figure 35: Most important factors when arranging travel insurance, November 2017
Brands can stand out through customer service
Older travellers are more concerned about price
Young people engaged more with online and reviews
Price was less important for cruise holidays
Level of cover is more important for those taking activity holidays
UK-based customer service is more important for those going on cruises
APPENDIX – DATA SOURCES, ABBREVIATIONS AND SUPPORTING INFORMATION
Abbreviations
Consumer research methodology
APPENDIX – MARKET SIZE AND FORECAST
Figure 36: Forecast for travel insurance gross written premiums – best, central and worst case scenarios, 2017-22
Forecast methodology

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