Unveiling travel insurance trends: What you need to know now!

In our latest Consumer Intelligence webinar, we dove deep into the evolving landscape of travel insurance. From market pressures to consumer behaviour, here are the standout points you need to know.

Travel insurance premiums on the rise

We kicked off by examining the inevitable impact of inflation on travel insurance. According to our Travel Insurance Price Index, prices have surged by 11% for P1 quotes and 8% for P1-5 quotes since April last year. Our Insight Analyst, Michael Dingwall, added, “Price only inflated roughly 11% and 8% retrospectively. I say ‘only’ because when comparing to other insurance sectors such as motor, which has seen a staggering levels of inflation, it doesn’t come across as significant.” This has resulted in an average market premium of £63 in April 2024, up by £6 from April 2023.

Additionally, Michael, highlighted, “While consumers may welcome more stable prices, insurers face challenges from ongoing market constriction. Younger travellers, particularly 18-19 year olds, saw the highest inflation at around 12%, while those over 60 saw the lowest at 7%.”

Worldwide destinations see double-digit price increases

Destination matters! We saw significant inflation of 15% to 20% for worldwide travel excluding the US and Canada over the past year. Interestingly, all destinations experienced a slight deflation from October to December 2023, continuing into February 2024.

But why is this? Michael explained, “Traveling across the pond isn’t financially viable at the moment for many singles, couples, and families due to the cost-of-living crisis. Looking back to 2022 and 2021, it does not seem to be a trend related to the time of year.”

Number of travel insurance brands up 18%

The travel market has seen a significant increase of 18% in the total number of brands between April 2023 and April 2024. Pre-existing brands have introduced new tiered propositions, while new brands have entered the PCW marketplace, diversifying the options available to consumers.

Michael explained, “Within this ever changing landscape we are also noticing an increased abundance of brands opting for abandoning the common product naming convention of 'bronze, silver, gold, platinum' for other more unique options.”

England overtakes Spain as top destination

Our consumer data revealed a surprising shift: staycations in England have surpassed Spain as the top holiday destination for Brits. This trend is driven by the cost-of-living crisis, making domestic travel more appealing.

Additionally, Brits are now favouring September for holidays over the traditional summer months of July and August. This shift is likely due to high prices and extreme summer temperatures. The trend towards traveling during ‘shoulder months’ is especially prominent among those over 65.

Millennials shun annual policies

Consumer buying behaviour shows a positive trend, with 36% planning to purchase annual policies and 24% opting for single-trip policies. Catherine Carey, our Head of Marketing, noted, “Younger people are less likely to buy annual policies and more inclined to buy single-trip policies or only for specific holidays.”

Our panel also explored policy uptakes, revealing that 29% have already purchased travel insurance for trips planned within the next 12 months, slightly up from 28% last year. This behaviour is still influenced by the pandemic and past travel disruptions.

Insurers must adapt to stay ahead

In the webinar’s final discussion, Michael emphasised the importance of pricing strategies for UK travel, with staycations on the rise. He also noted the significance of pricing short-notice policies, as highlighted by a Go.Compare press release stating that nearly a third of travel insurance buyers purchase insurance on the day of travel.

Addressing product stagnation, our CEO Ian Hughes discussed innovation opportunities for insurers, such as leveraging AI to enhance customer experiences and ensure comprehensive coverage. He stressed, “Anything that enhances customer enjoyment while ensuring protection is an opportunity.”

Key takeaways: navigating a volatile market

Our panel concluded with essential takeaways. Ian emphasised the need for a clear strategy with the ability to tactically flex in a volatile market. Catherine Carey highlighted the importance of understanding evolving consumer behaviour, and Michael Dingwall advocated for a data-driven approach in uncertain times.

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