Britain’s travel insurance market declined in 2015 due to fewer written policies and non-hardening of rates resulting from market competition.
New research from Wise Guy Reports revealed that the market fell by 12.3% to £625.4 million in gross written premium last year despite the rising number of UK residents traveling overseas.
According to the report, UK residents made 65.7 million trips abroad in 2015, but majority travelled to Europe.
This has prompted UK residents, particularly younger travellers, to rely on European Health Insurance Cards instead of purchasing travel insurance in order to save money.
“The profitability of the market is struggling as competition is hindering rate increases, while claims costs for insurers are rising due to medical inflation despite the number of claims being in decline. Recent years have seen a shift towards annual policies over single-trip cover,” the report said.
“This is a result of more frequent travel and the convenience of an annual policy; the rise of annual travel insurance distributed via added-value current accounts; and fewer individuals booking a holiday and consequently single-trip insurance through a tour operator or travel agent.”
The report expects the UK travel insurance market to attain minimal growth in the next few years, reaching only £628 million in 2020.
The research blames this on the UK’s decision to leave the European Union, which is seen to affect the UK residents’ disposable income, limiting their travels abroad.
“Furthermore, traveling abroad will become more expensive as a result of the weakened pound, which will impact travel trends and consequently the travel insurance market, until the economy begins to recover,” the report said.
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