Travel insurance is booming due to business travel, while seniors and families have potential for growth.
Tourism is growing and the insurance industry has taken notice. According to Market Research, travel insurance was a $12 billion industry in 2017, yielding a return (CAGR) of 4.7% for investors. Tourism has grown like crazy over the last several years. The United Nations World Tourism Organization (UNWTO) claims international tourism grew by 3.9% in 2016 over the previous year, as a total of 1.2 billion tourists trotted the globe. That number is projected to reach 1.8 billion by 2030.
Travel insurance primarily covers costs and loses from medical emergencies and lost bags, but also loses as a result of terrorist attacks, kidnappings or hijackings. However, Market Research points to a lack of awareness about the insurance as a major factor hampering growth. Insurance agents need to educate customers about travel insurance and what it covers.
Another stumbling block for travel insurance is territory coverage. Developing or third world nations may not accept the coverage at all. Other newly developed countries may offer scant coverage. Robust global coverage would be a boon to the tourism industry as a whole.
It’s not millennials taking eurotrips that is driving travel insurance. It’s corporate travel. Business travelers accounted for 25% of the market share in 2017. The Global Business Travel Association (GBTA) claims that 79% of business travelers carried medical travel and 60% carried luggage loss insurance in 2015. Senior citizens are also a growing segment for travel insurance, followed by education travelers. Family travelers and backpackers account for large segments of travelers, but smaller segments of travel insurance buyers.
Where are Travelers Buying?
Europeans account for the largest geographic segment of travel insurance buyers at 40% of global revenue in 2017. This is consistent with the volume of international European tourists. The World Tourism Organization (UNWTO) claims there were 583 million outbound tourists from Europe in 2015, accounting for roughly half of international tourism. North America comes in 2nd place as a segment, with China, Japan, South America, Middle East and Africa only representing fractions of travel insurance revenue. China expects to be an emerging market as tourism numbers project to rise.