The global travel insurance market size was valued at USD 22780 million in 2021 and is estimated to reach an expected value of USD 48665 million by 2030, registering a CAGR of 8.8% during the forecast period (2022 – 2030).
An insurance product called travel insurance is made to cover unforeseen circumstances that may arise while on the road, whether domestically or abroad. It typically offers coverages for unexpected medical costs, trip cancellation, aircraft delays, lost luggage, public liability, and other costs to reduce risks while traveling. Additionally, based on coverages, travel insurance providers offer a variety of plans by paying for expenses and losses related to travel. Additionally, several intermediaries in the supply chain, including insurance aggregators, banks, and brokers, give customers various options to evaluate goods and pricing and recommend appropriate insurance policies. Additionally, visitors visiting nations like Thailand, Cuba, Antarctica, Schengen nations, the United States, and the United Arab Emirates must purchase international travel insurance.
Online travel insurance sales through direct airline websites, online travel agents (OTAs), and company websites and applications are becoming increasingly popular. This is fueling the expansion of the online travel insurance sector. Additional market expansion factors include increased tourism by rising disposable income, simple internet travel bookings, package vacations, extended holiday coverage, etc. A surge in tourism brings about several incidents, including trip cancellations, luggage, critical document losses, medical emergencies, and others. Customers choose travel insurance to reduce these risks, a crucial element driving the market for travel insurance.
With increased internet usage for online comparison shopping, consumer preferences are changing and gaining a seamless experience for travel insurance purchases. Online portals such as direct airline sites, online travel agencies (OTAs), and company websites & applications drive the growth of the online insurance market, spreading awareness among users in the market. In addition, these online sites typically offer limited options from a single company, providing travelers with the easiest way to compare and buy travel insurance coverages from top-rated providers in the market. As a result, these factors behind comparison-shopping via online sites fuel the growth of the travel insurance premium during the forecast period.
For example, in 2019, a study conducted by TravelInsurance.com offered a way to compare multiple travel insurance companies and projected that online comparison sites to be the fastest growing sales channel for the travel insurance industry in the market.
Travel insurance providers in the market are adopting several model acts, laws & regulations to sustain the competitive environment. The new approaches by regulatory bodies include the development of prospective legislation and enforcement activity, accelerating the growth of travel protection products and services in the industry. The combination of enforcement & development of model laws drives the growth of travel insurance premiums; thereby, modernizing the unique nature of travel protection offerings across the industry. For instance, in the U.S., the National Association of Insurance Commissioners (NAIC) has proposed a new model act to promote public welfare and a comprehensive legal framework within the travel insurance industry. In addition, the regulatory body implemented a significant step for the industry to address growing consumer needs with standard laws and regulations.
Lack of understanding and awareness regarding travel insurance coverages is a significant factor that restrains the growth of the travel insurance market. The consumers' experiences and adoption of travel insurance remain a primary concern, which needs to be addressed by eliminating knowledge gaps for travel insurance in the market. A survey conducted, in 2018, by TravelInsurance.com projected that 47% of the respondents were unaware of health insurance coverages included in the policy. In addition, misguidance toward premium rates, coverage provided, the value proposition of travel insurance, and the benefits it provides. As a result, these factors limit the market's growth of travel insurance premiums.
Growing market prospects for insurers are being created by technologies, including geolocation, application program interfaces (API), artificial intelligence (A.I.), data analytics, blockchain, and big data. With these advancements in technology, distribution channels for travel insurance should operate more efficiently and offer coverages at the point of sale.
Additionally, travel insurance companies may provide their clients with highly customized user experiences thanks to digital transformation. Further, to maintain market position, insurers are considering the use of big data analytics that offer possibilities of generating significant premiums.
In addition, technology helps in data collection, caters to customer-specific needs, calculates risk, and detects fraud. As a result, technology improvements that make travel insurance easy to get and convenient are predicted to generate profitable market prospects for insurers.
The global international travel insurance market is divided into insurance cover, end users, distribution channels, and regions.
In terms of insurance cover, the global travel insurance market is segmented into single-trip travel insurance, annual multi-trip travel insurance, and long-stay travel insurance. The single-trip travel insurance segment was the highest contributor to the market and is estimated to grow at a CAGR of 7.8% during the forecast period. Single-trip policies are popular travel insurance policies across all regions. However, Asia-Pacific witnessed higher demand for single-trip travel insurance policies, owing to an increase in the number of multi-generation travelers such as grandparents, parents, and grandchildren.
The annual multi-trip travel insurance segment is the fastest growing. Business travelers tend to travel multiple times within a year. An annual multi-trip policy is best suited for these users, and its demand is expected to grow at the highest rate during the forecast period. In addition, an increase in business travelers in the Asia-Pacific region provides a promising opportunity for travel insurance providers in the market.
Based on distribution channels, the global travel insurance market is classified into insurance intermediaries, insurance companies, banks, insurance brokers, and insurance aggregators. The insurance intermediaries segment was the highest contributor to the market and is estimated at a CAGR of 7.9% during the forecast period. Insurance intermediaries are upgrading their businesses by incorporating software like the global distribution system (G.D.S.), which enables transactions between travel industry service providers such as airlines, hotels, car rental companies, and travel agencies. This software becoming a significant trend helps in determining customer behavior & increased purchases for travel insurance policies in the market.
The insurance aggregators segment is the fastest growing. Consumer buying behavior, insurers' participation in aggregator services, and an increase in travel and tourism are becoming significant trends in the market. For instance, a study conducted by Accenture projected that 83% and 60% of insurers in the U.K. and the U.S. are launching their aggregator sites for travel insurance. Furthermore, marketing expenditure by existing insurers for providing online travel insurance services boosts the segment's growth. Conversely, educating customers, assessing their product needs, and serving the right product via online portals are expected to create lucrative opportunities for insurance aggregators in the upcoming years.
Based on end-user users, the global travel insurance market is segmented into senior citizens, education travelers, business travelers, family travelers, and others. The family travelers segment was the highest contributor to the market and is estimated to grow at a CAGR of 7.1% during the forecast period. The rise in multigenerational travel trends among families is expected to increase the demand for travel insurance policies. In addition, the travel market no longer refers to the notion of a nuclear family. Instead, it defines "family" as a combination of four or more adults. This has become another growing trend in family travelers in the market. Moreover, due to the increase in adventure travel packages, families travel with children above 18. The young generation of travel influencers is growing rapidly, thereby boosting the segment's growth. On the contrary, healthier and more affluent grandparents have supplemented this growth with luxury travel, entertainment, and get-togethers among family members residing in different countries is the essential purpose of travel. Therefore, these factors provide lucrative opportunities for travel insurance providers in the upcoming years.
The business travelers segment is the fastest growing. A growing network of co-working and remote workers are rapidly integrating into the corporate travel booking ecosystem. This growing demand for corporate travel experience, including booking, expenses, customized travel insurance policies, trip management, and others, is becoming a significant trend in the market. Moreover, "Bleisure," a combination of business and leisure travel, is one of the biggest travel trends, which fuels t demand for travel insurance premiums in the market. With these increases in business travel spending, international business transactions have increased penetration of travel insurance among business travelers, dynamically targeting these travelers based on both sets of interests. Conversely, travel insurance providers can create corporate travel insurance plans with an option to extend coverage by leisure activities and respond to various factors such as health, safety, political or social change, security, natural disasters, and others. These factors create immense potential for insurers in the upcoming years. For instance, developing county, such as India, is expected to witness rapid growth in business travelers, owing to increased expansion in overseas businesses in the market.
Region-wise, the global travel insurance market is analyzed across North America, Europe, Asia-Pacific, and LAMEA.
Asia-Pacific was the highest revenue contributor and is estimated to grow at a CAGR of 11.3%. It is considered the fastest growing region globally because of its emerging economies, growing population, and middle-income segment. The travel insurance market is particularly brisk in countries such as China, Japan, India, Indonesia, Korea, Australia, Hong Kong, Taiwan, New Zealand, and Singapore, with high G.D.P. growth and a rise in per capita income. Further, users such as senior citizens and baby boomers are opting for insurance intermediaries, owing to the long-term relationship and trust associated with travel insurance purchases. Insurance intermediaries provide better services and an understanding of the travel insurance policies in the market. In addition, nearly two-thirds of travel insurance policies sold in this region are carried out by traditional travel agencies and suppliers. Moreover, single-trip policies are popular policies among travelers in the region. The insurance intermediaries are the prime distribution channel for selling travel insurance policies in Asia-Pacific. Stringent laws and regulations regarding data protection in the travel insurance industry fuel the region's demand for the travel insurance market.
Europe is the second largest region. It is estimated to reach an expected value of USD 12145 million by 2030, registering a CAGR of 6.4%. The rise in the number of senior citizen travelers taking abroad and domestic trips and the increase in business travel spending are some of the factors that fuel the growth of the European travel insurance market. Furthermore, the increase in the trend of multigenerational travel also drives the growth of the travel insurance market in the region. In Europe, single-trip policies occupy the most significant travel insurance market share.
Additionally, the rise in business travelers and senior citizens is expected to boost the market sales of annual and long-stay travel insurance policies. Further, the majority of policies across Europe are sold through insurance intermediaries; therefore, this segment is expected to grow during the forecast period. For instance, Allianz Partners, which owns Allianz Global Assistance U.S., projected that 15 of the 26 Schengen nations currently require mandatory travel insurance for visitors, students, and ex-pats. These end users are creating profitable opportunities for travel insurance providers in the region.
North America is the third largest region. In North America, trip cancellation/interruption is the most popular policy and is expected to remain the same during the forecast period. In addition, the sale of travel medical insurance and evacuation insurance plans has witnessed a steady demand in the market. Senior citizens, family travelers, and backpackers are the significant buyers of travel insurance in this region, and most of the policies are sold via travel intermediaries. These industries are creating lucrative opportunities for insurance providers in the region. For instance, in 2018, a study by the U.S. Travel Insurance Association projected that consumers spent nearly $3,800 million on travel protection via a travel insurance policy.
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