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Travel abroad by UK residents has been increasing over recent years as a result of an improving economy following the financial crisis of 2007-08. However, following the UKs decision to leave the EU, it is forecast that pressure will be put on household disposable income. Furthermore, traveling abroad will become more expensive as a result of the weakened pound, which will impact travel trends and consequently the travel insurance market, until the economy begins to recover.
- Total claims costs have risen annually by 6.8% to Pound364.5m in 2015.
- 27.6% of those with travel insurance had cover through their current account in 2015.
- UK residents made 65.7 million trips abroad in 2015, predominantly to Europe.
- The UK travel insurance market is forecast to be worth Pound628m in 2020.
Verdict Financials "UK Travel Insurance: Market Dynamics and Opportunities 2016" report provides an in-depth analysis of the UK travel insurance market. It looks at market size and profitability as well as changes in premiums, claims, travel trends, regulations, and opportunities. It provides a thorough overview of the market along with future forecasts.
Reasons To Buy
- 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.
Table of Contents
Competition is preventing rates hardening, despite rising claims costs
Critical success factors
The UK travel insurance market continued to decline in 2015
The UK travel insurance market reported a further drop in value in 2015
The proportion of GWP from annual travel policies has grown by 6.3pp since 2011
The number of policies written has remained steady following four years of decline
Annual policy premiums have remained steady, whereas single policy rates have fallen
Premium rates and average claims costs are highest for older policy holders
The market COR is estimated to be below 100%
Banks and building societies offering travel insurance are a convenient choice
Over a quarter of those with travel insurance are covered through their current accounts
Added-value accounts are becoming more popular
There are disadvantages to travel insurance provided through bank accounts
Claims costs are rising despite the number of claims being in decline
Total claims costs have reached a five-year high
Medical expenses drove up total claims costs in 2015
The number of UK travel insurance claims has been declining since 2011
The average cost per claim is in long-term ascent across all perils
Travel abroad by UK residents is increasing
Both the number of visits and expenditure abroad by UK residents are increasing
UK residents are traveling abroad to go on holiday and to visit friends and family
Over three quarters of trips made by UK residents abroad are to Europe
Brits are traveling further afield and seeking action-packed holidays
Airbnb and home-sharing are becoming popular ways to travel
Travel abroad is influenced by socio-political, health risk, and economic factors
The socio-political climate of a country is now a concern for holiday makers
Insurers and holiday companies are responding to those vulnerable to disease epidemics
Exchange rates can influence which holiday destinations Britons choose
Expenditure on the luxury of travel is dependent on household disposable incomes
THE MARKET GOING FORWARD
The UK travel insurance market is forecast to be worth Pound628m in 2020
GWP for the UK travel insurance market will fall towards 2017 but then start to grow
The economy will dictate household disposable income and spend on holidays abroad
Travel insurance will become more important if the EHIC system ends following Brexit
Premiums will have to rise in response to rising claims costs
The FCA will respond to appointed representatives mis-selling insurance
The FCA found that appointed representatives have not been properly regulated by their principal firms
Appointed representatives will remain an area of focus for the FCA
Buying travel insurance and receiving claims payments will get easier
Self-service kiosks are appearing in UK airports for last-minute cover
Branded debit cards will transfer claim payments in real-time
Big data will play a part in personalization and managing risk
Wearable healthcare technology will be able to assess the risk of particular individuals
Wearable technology could help diagnose and manage medical conditions
Wearable technology could improve the relationship between insurers and policy holders
Abbreviations and acronyms
Primary and secondary research
Market sizing methodology
About Verdict Financial
List of Tables
Table 1: UK travel insurance market GWP (Pound000s) and annual growth (%), 2011-15
Table 2: Share of the UK travel insurance market GWP by policy type (%), 2011-15
Table 3: Number of travel insurance policies written (000s), 2011-15
Table 4: UK travel insurance premium rates by policy type (Pound), 2011-15
Table 5: UK travel insurance average premiums, claims costs, and frequency by age, 2015
Table 6: UK travel insurance market gross loss ratio (%), 2011-15
Table 7: UK travel insurance claims volume, cost, and frequency, 2011-15
Table 8: UK travel insurance total claims costs by peril (Poundm), 2011-15
Table 9: Number of UK travel insurance claims by peril (000s), 2011-15
Table 10: Average claims cost of UK travel insurance by peril (Pound), 2011-15
Table 11: Number of visits abroad (000s) and expenditure abroad (Poundm) by UK residents, 2011-15
Table 12: Number of overseas trips by purpose (000s), 2011-15
Table 13: Number of overseas trips by region (000s), 2011-15
Table 14: Number of overseas trips by country (000s), 2011-15
Table 15: British pound exchange rates against the main global currencies, 2012-15
Table 16: Real household disposable income annual change (%) and unemployment rate (%), 2006-15
Table 17: UK travel insurance market GWP and forecast projections (Poundm), 2011-20f
Table 18: Forecasted annual GDP percentage growth (%), 2011-20f
List of Figures
Figure 1: The travel insurance market continued to decline in 2015
Figure 2: Annual policies continue to gain GWP share of the UK travel insurance market
Figure 3: Fewer customers are purchasing travel insurance through tour operators
Figure 4: Annual policies are more popular than single trip across most distribution channels
Figure 5: The number of annual policies has grown, while single policies fell in 2015
Figure 6: Market competition makes it hard for insurers to increase rates
Figure 7: The gross loss ratio has risen year-on-year, suggesting a worsening COR
Figure 8: Over a quarter of customers have travel insurance through their bank account
Figure 9: The estimated average claims cost has been rising over recent years
Figure 10: Medical expenses drove 58.2% of growth in total claims costs in 2015
Figure 11: The number of UK travel insurance claims continues to fall
Figure 12: Medical expenses saw the greatest rise in claims costs in 2015
Figure 13: Visits and expenditure abroad by UK residents continued to rise in 2015
Figure 14: The majority of overseas visits made by UK residents are for holiday purposes
Figure 15: The majority of overseas visits made by UK residents are to Europe
Figure 16: Egypt and Tunisia have seen drops in tourism, whereas visits to Greece increased in 2015
Figure 17: Travel trends are affected by socio-political, health risk, and economic factors
Figure 18: Household disposable income and unemployment rates further improved in 2015
Figure 19: The market is forecast to fall towards 2017 but then rise to be worth Pound628m in 2020
Figure 20: Economic growth will slow in 2017 following Brexit, but will then begin to recover
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