Continued growth in the travel insurance market will bring its value to nearly $3.5 billion, says co-founder of TravelInsurance.com Stan Sandberg
Since 2012, travel insurance has been growing consistently at more than ten per cent per year, according to data from US Travel Insurance Association’s 2014–2016 Travel Protection Market Study and 2012–2014 Travel Insurance Market Survey, with recent activity driving even more interest, according to TravelInsurance.com. For 2018, Stan Sandberg predicts similar growth, bringing the overall US travel insurance market to nearly $3.5 billion. The three broad trends fueling this growth will be global travel disruptions, favorable traveller demographics and the continued shift in how individuals shop for travel.
“The travel insurance industry is entering a period of high growth set by a confluence of factors, which together shift the way travellers view the need to protect their trip investments, driving many first-time travel insurance buyers into the market,” said Sandberg.
The following are key predictions for 2018 as to what will drive this expected increase:
Global Travel Disruptions:
Mother Nature may continue to wreak havoc: The Atlantic Hurricane season in 2017 was one of the worst in recent years, causing devastation across the Southeast U.S. and Caribbean. Between hurricanes and other natural disasters, there is no shortage of events that can directly impact one’s travel plans.
Threat of terrorism will continue to impact travel: Unfortunately, over the past decade, terror attacks have moved beyond the borders of countries in conflict. In recent years, we’ve seen terror attacks occur in some of the most popular tourist destinations, including Paris, London, Barcelona, Nice and Istanbul. Most travel insurance plans with trip cancellation offer coverage for terrorist attacks in the city on a traveler’s itinerary. Since it’s unlikely that terror attacks will deter the intrepid traveler, travel insurance can offer trip protection in the event one’s travel plans are affected by future attacks.
“The reality of global travel today is different from the glamour of past generations–with issues like long security lines, airline breakdowns and computer glitches becoming the norm,” said Sandberg. “On top of these inconveniences, today’s traveller also has to contend with major travel disruptions, such as severe weather and terrorist attacks, that can disrupt a trip even before it starts. While impossible to predict, the trend lines suggest that 2018 will bring more of the same.”
Boomer travel will continue to increase, leading to greater purchases of travel insurance. Baby boomers, who represent one of the largest demographics, are entering their retirement years, and one of the first things retirees do is travel. This will be a significant driver for travel insurance purchases in 2018 and over the next decade. This demographic represents the ideal travel insurance consumer – high levels of discretionary spending with the time and desire to see the world. They are also conscious about their health.
Millennials will consider travel insurance in greater numbers: Footloose and full of wanderlust, Millennials will continue to explore the globe in search of the amazing people, places and experiences that will make their Snapchat and Instagram accounts explode with envious followers. But unlike the depiction in the media as aloof, Millennials are extremely savvy consumers who’ve grown up on online comparison shopping.
“While Boomers may be more cautious about what could happen while on vacation, Millennials take calculated risks,” explains Sandberg. “They are quite thoughtful about trip-planning, especially around a budget, and they understand the importance of protecting the things they purchase, whether it’s an iPhone with AppleCare or a month travelling in Thailand with trip protection.”
The Way We Shop
Consumers will comparison shop travel insurance plans versus accepting what is offered initially. Consumers are increasingly aware of the need to compare their travel options and read reviews before buying. This applies to hotels, cruises, airlines, tours and more. Checking ‘yes’ to the single source policy that they are offered from their online travel provider won’t be enough. Travellers want easy and straightforward ways to purchase on their own, with complete transparency and trustworthiness.
Online travel bookings will lead to more online travel insurance purchases. While a significant portion of travellers book their trips online, many still work with local travel agents and tour operators. There will be continued growth in all demographics moving to self-service online travel bookings and, as this market expands, insurance will become a much larger online seller.