UK Travel Insurance 2010

Introduction
This report is a valuable source of information on the UK travel insurance market. It provides analysis and data for market sizes, consumer trends and the key competitors in the travel insurance sector. It also includes with market drivers and recent developments as well as forecasts until 2014.

Features and benefits
Insight into the main competitive developments taking place in the UK travel insurance market and their impact.
A detailed analysis of the marketing spend of the top 10 UK travel insurance advertisers.
GWP forecasts to 2014, based on Datamonitor’s in-house sizing model, expertise and primary interviews with top travel insurers.
Highlights
Economic uncertainty across UK consumers, the expense of longer haul flights and the exchange rates between the pound sterling and foreign currencies has led to a lower propensity to travel.

Travel underwriters have stated, in conjunction with ABI figures, that they have been increasing their premium rates. However, due to the lower pricing and increasingly popularity of packaged annual cover, the overall average price for travel insurance has decreased.

The most notable difference in 2009 was the increase in that of radio campaigns. In 2008, radio advertising made up only 0.2% of the total industry advertising spend in 2008 but rose to 3.1% in 2009. These figures are often dependant on the market players' decisions in a particular year.

Your key questions answered
How has the travel insurance market been faring in the past and how is it forecast to perform in the next four years?
What have been the changing consumer attitudes and trends resulting from the recession?
How does my travel insurance business benchmark against the competition?

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TABLE OF CONTENTS
Overview Error! Bookmark not defined.
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Executive Summary 2
Travel insurance coverage was under the spotlight following an eventful year for travelers 2
Travel insurance marketing spend fell by more than a quarter in 2009 3
The number of visits abroad dropped dramatically in 2009 by 15% 3
Further decreases in travelers and policy sales will lead to market contraction 4
Market Context 11
Introduction 11
Travel insurance coverage was under the spotlight following an eventful year for travelers 11
Total travel Insurance gross written premiums contracted by 3% in 2009 13
Profit margins are shrinking in the UK travel insurance market 19
Customer Focus 24
Introduction 24
The number of visits abroad dropped dramatically in 2009 by 15% 24
88% of UK consumers who travel overseas take out travel insurance 32
Lloyds TSB distributed the most travel insurance policies 36
Travel insurance marketing spend fell by more than a quarter in 2009 41
Competitive Dynamics 47
Introduction 47
The corporate partnerships space is seeing a number of developments 47
Munich Re joins the top 5 players in the UK travel insurance market 48
Future Decoded 52
Further decreases in travelers and policy sales will lead to market contraction 52
The UK travel insurance market is forecast to recover from 2012 53
Appendix 56
Supplementary data 56
Definitions 57
Research methodology 57
Further reading 58
Ask the analyst 58
Datamonitor consulting 58
Disclaimer 59


TABLE OF FIGURES
Figure 1: The number of visits abroad by UK residents fell by more than 15% in 2009 4
Figure 2: Fortis was one of the insurers to cover claims costs for the volcanic ash situation 12
Figure 3: Total gross written premiums in the travel insurance market shrank to £744m in 2009 14
Figure 4: Added value accounts are fuelling growth in the annual trip market 15
Figure 5: The modest price increase of single trip policies continued into 2009 17
Figure 6: Number of travel policies sold, 2005-09 (000s) 18
Figure 7: The gross loss ratios of the travel insurance business worsened slightly in 2009 19
Figure 8: More frequent claims of lower value occurred during 2009 21
Figure 9: Medical expenses accounted for over half of all travel insurance claims costs 22
Figure 10: The number of visits abroad by UK residents fell by more than 15% in 2009 24
Figure 11: Since Q3 2008, visits abroad have decreased year-on-year 26
Figure 12: UK residents' visits abroad by destination, 2005-09 (000s) 28
Figure 13: The number of business trips taken by UK residents dropped significantly in 2009 29
Figure 14: The number of holidays taken witnessed a sizeable decrease in 2009 31
Figure 15: Older consumers are more likely to have not travelled abroad this year 32
Figure 16: During your last trip abroad, were you covered by any form of travel insurance? 34
Figure 17: Which type of insurance were you covered by? 35
Figure 18: Bancassurers have a strong presence in travel insurance distribution 37
Figure 19: How did you arrange your travel insurance policy? Top five responses per age group 39
Figure 20: Travel insurance advertising expenditure fell during 2009 41
Figure 21: Breakdown of travel insurance advertising spending by media 43
Figure 22: Most of the top ten travel insurance advertisers primarily focus their strategy on one medium 44

Figure 23: Top 10 UK travel insurers by market share, 2009 (%) 49
Figure 24: The market is expected to contract further before slowly growing again from 2012 54


TABLE OF TABLES
Table 1: GWP in the travel insurance market, 2005-09 (£000s) 14
Table 2: UK travel insurance GWP split by policy type, 2005-09 (%) 16
Table 3: UK travel insurance premium rates, 2005-09 (£) 17
Table 4: Number of UK travel insurance policies written, 2005-09 (000s) 18
Table 5: Gross loss ratios by line of business, 2005-09 (%) 20
Table 6: UK travel insurance claims volume, costs and frequency, 2005-09 21
Table 7: UK travel Insurance claims by peril 2005-09 23
Table 8: Number of visits abroad by UK residents, 2005-09 (000s) 25
Table 9: Number of visits abroad by UK residents by quarter, 2006-Q1 2010 (000s) 27
Table 10: UK residents' visits abroad by destination, 2005-09 (000s) 28
Table 11: UK residents' visits abroad by reason for travel, 2005-09 (000s) 30
Table 12: Total number of holidays by UK residents, 2005-09 (000s) 31
Table 13: How many times did you travel abroad in the last 12 months? Responses split by age 33
Table 14: During your last trip abroad, were you covered by any form of travel insurance? Responses split by age 34
Table 15: Which type of travel insurance were you covered by? Responses split by age 36
Table 16: With which company were you insured? Top 25 responses by percentage 38
Table 17: How did you arrange your travel insurance policy? Responses split by age 40
Table 18: UK travel insurance advertising spend, 2005-2009 (£) 42
Table 19: Top 10 UK travel insurance advertisers by media, 2009 (£) 45
Table 20: Top 10 UK travel insurance advertisers, 2006-09 (£) 46
Table 21: Top 10 UK travel insurers by GWP, 2009 (£000s) 50
Table 22: Top 10 UK travel insurers by market share, 2009 (%) 51
Table 23: Key variables affecting travel insurance GWP, 2010-15 53
Table 24: UK travel insurance GWP, 2005-15f (£000s) 55
Table 25: UK travel insurance insurers by premium income, 2006-09 (£000s) 56


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