The global travel insurance market is expected to be worth US$35 billion by the year 2027, with a forecast rise in value of around eight per cent in the US market alone, according to a research study by Global Market Insights Inc.
Demand for travel insurance is forecast to be driven primarily by growing demand in the tourist industry for ‘high-risk sports activities’ and ‘adventure tourism’. Participants in such activities are expected to be more likely to take out travel insurance to safeguard themselves against potential mishaps.
The growth of customisable policies
Global Market Insight also credits the rise in more customisable policies as a key driving factor in the market’s projected growth, with interest and awareness in such policies being fuelled in part by the popularity of travel blogs and social media influencers.
- Policies tailored to activities such as water sports, mountaineering or racing, longer-than-average travel policies
- Travel insurance plans tailored to the needs of the elderly, which include greater cover for pre-existing and age-related health conditions, and which provide dedicated helpline numbers for elderly clients
- Extendable travel insurance coverage designed to manage disruption caused by the Covid-19 pandemic.
Other new innovations in travel insurance
Other factors which Global Market Insights note will contribute to the growth of the region’s tourist industry include:
- The growing use of digital tools by insurance providers, including travel insurance distribution platforms which utilise artificial intelligence (AI), data analytics, geolocation, and GPS
- The easy availability of online travel reservations and discounted package trips, such as the ability for online reservation platforms to collaborate with insurance providers to offer tailored services, international assistance, claims service and discounted package trips
- Government initiatives that guide international tourism, such as laws and regulations which encourage the purchase of travel insurance as a perquisite for VISA applications
A reflection of the wider travel industry
The projected growth also reflects the expanding tourism sector in places such as North America, which remains buoyant despite the impact of the coronavirus pandemic.
According to a report by the World Travel and Tourism Council (WTTC) in October, the region’s tourist industry represented approximately $2.2 trillion, but later fell to $1.25 trillion in 2020 as international travel ground to a halt.
Despite this, the WTTC says that the sector is on track to recoup more than a third of that loss this year, with a projected value of $1.7 trillion for 2021 – a recovery which the WTTC credits to the successful rollout of Covid vaccines in the US and Canada, coupled with relaxed travel restrictions on the continent.
This is expected to continue next year, with a potential year-on-year rise of 26.4 per cent projected for 2022 which will bring the region’s tourist industry back to pre-pandemic levels at a value of $2.2 trillion.