Members of India’s travel insurance industry are forecasting a significant rise in demand for coverage in the coming months, driven by the lifting of Covid travel restrictions and the return of leisure travel during the summer. Greater health awareness caused by the pandemic, alongside the implementation of mandatory insurance policies in some destinations, are also factors which could stimulate growth.
It follows the resumption of resumed regular international passenger flights in India on 27 March 2022, following several setbacks that saw the planned reopening of the country postponed from its original date of 15 December.
The global travel insurance sector had previously experienced a substantial fall in demand in 2020, due to travel restrictions put in place due to the coronavirus pandemic.
The travel insurance market is experiencing ‘significant demand growth’
Speaking to the Financial Express, Sanjay Datta, ICICI Lombard General Insurance’s Chief of Underwriting and Claims explained that his company was expecting significant demand growth and had already seen over 50 per cent year-on-year growth in travel insurance premiums for the 2021-2022 financial year, compared with 2020-2021.
However, ‘the travel insurance industry is still affected due to Covid in several parts of the globe and hence, the current fiscal year is expected to end at 50 per cent of the pre pandemic travel insurance market’, Datta said.
He added that while the fact that some tourism-based economies have made travel insurance mandatory for visitors will provide a boost to the travel insurance industry, business travel will likely sluggish due to remaining restrictions still enforced in various countries, employee safety concerns and the proliferation of video conferencing.
Driving factors include the relaxation of travel restrictions and lingering concerns about Covid
Subramanyam Brahmajosyula, Head of Reinsurance and Product Development at SBI General Insurance, agreed, arguing that: “Now that not only in India but for the rest of the world the situation is improving, Covid-related restrictions are slowly being relaxed and people are allowed to travel, I think it is only a matter of time…before we see a significant increase in demand for travel insurance cover’.
Brahmajosyula also added that in relation to the war in Ukraine, he expected that ‘rather than increasing premiums for insurance cover for travelling to Russia and Ukraine … individual insurance companies may take a decision that temporarily they will not cover travel to these two countries.’
In addition, Parag Ved, President of Tata AIG General Insurance, argued that lingering concerns relating to coronavirus could act as an additional drive for insurance purchases, beyond just the reopening of international borders. He noted that due to fears about coronavirus, a higher percentage of travellers were now choosing to purchase travel insurance – and purchasing higher value policies.
Ved said that a similar move was being seen in the business travel sector, as businesses try to better safeguard their employees’ health, and added: “There are many countries which have made compulsory travel insurance with a specific sum insured, and it will also lead to higher sum insured.”