Canadian travel insurance flourishes
According to David Redekop, principal research associate for independent, not-for-profit, research organization the Conference Board of Canada (CBoC), Canadians travel abroad three times more than Americans, while the British (along with the Americans) are still struggling to emerge from the recent recession – one that Canada was able to navigate more successfully. Canadian’s propensity for travel is partly accounted for by the critical mass of almost one million snowbirds (retired people aged 55 and up who spend at least 30 days out of the country each winter, mostly in the southern US, Mexico and the Caribbean) and who have proven that it would take some calamity to keep them from travelling, usually by road, to more tolerable weather during Canada’s brutal winters.
Redekop noted that though there was a slight dip in outbound leisure trips in 2009 – from 23.6 million to 21.3 million over the previous year – outbound travel momentum was soon regained, and since that time there has been a steady increase in travel of approximately four per cent, on average, annually. He projected that if this trajectory remains constant, he expects to see the outbound travel figure top 30 million by 2016. For reference: this is out of a total Canadian population which now just barely tops 35 million, adults and children.
Redekop also emphasised that much of the travel momentum was being generated in the 55 to 64-year age group – the sector of the population that has the wherewithal to travel frequently, and to more and more exotic locations. “We’re getting older, visiting more countries … Who would have thought that countries like Cambodia, those in Eastern Europe or Turkey would become major tourism destinations for Canadians,” he said.
What this all means for travel insurers and their affiliated organisations, is a robust marketplace for out-of-country travellers – one in which he expects trips to countries other than the US to grow steadily among Canadians 65 and older to more than two million annually by 2050, from about one million currently. At the same time, however, he expects to see Canadian travel by those 65 and older to the US to grow even more aggressively because of the higher cost of travelling overseas: from approximately three million currently to six million by 2050. According to CBoC research data, 74 per cent of Canadians had private travel insurance of some kind on their last pleasure trip outside the country.
Redekop also noted that Canada’s travel insurance industry was shown to be worth more than CA$1 billion (US$0.98 billion), with the sale of individual trip insurance having grown from a value of $207 million in 2000 to $532 million in 2011, and annual multi-trip sales having increased from $117 million in 2000 to $287 million in 2011. This does not include group policies, credit cards, or coverage provided by employer/pension plans (most of which are short-term and some of which have strict limits on pre-existing conditions and trip lengths).
According to Redekop, individual trip policy sales have increased from three million in 2000 to five million in 2011, with the only noticeable annual dip occurring in 2006. Overall, the annualised increase has been 10.2 per cent, with the steadiest rate of increase occurring between 2006 and 2011, when individual policy sales rose from 3.2 million to 5.2 million. The cost of individual policy premiums to the consumer has also shown a persistent increase from 1995, when a policy averaged $58.68, to $102.93 in 2011, with a slight dip in 2012 to $97.86.
In another report from CBoC obtained by ITIJ, it was revealed that Canadian travel to Asia is expected to remain buoyant into the foreseeable future: leisure travel having increased at 8.1 per cent annually between 2000 and 2012. This makes Asia and the Pacific the fastest growing destination for outbound Canadian travel. It is worth noting that all major Canadian cities have large and growing Asian immigrant populations and visits to friends and relatives (VFRs) contribute to this trend toward Asia.
But visits by VFRs is not the only incentive for Canada’s aging boomers who, according to the CBoC, ‘are experience-seekers with great interests in engaging local cultures and learning about traditions’. The report notes that in 2012, almost 1.2 million leisure trips were made to Asia by Canadians, the great majority for tourism and leisure.
The report also highlighted that Australia is the prime target for Canadians looking to travel throughout the Pacific. The report noted that slightly more than 16 per cent of outbound leisure travellers to Asia/Pacific said they planned to visit Australia during the next three years, followed by 12 per cent heading to Thailand, 11 per cent to Japan, eight per cent to China, four per cent to Cambodia and two per cent to Nepal.