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Demand for travel insurance skyrockets as safety becomes top priority

The global travel insurance market size is expected to reach $63.9 billion by 2030

Published: Wed 7 Aug 2024, 9:24 PM

By
Issac John

The demand for travel insurance has witnessed a significant increase in the UAE with customer inquiries skyrocketing by 182 per cent in 2024 compared to last year, according to a leading insurance market player.

The surge in travel insurance is primarily fuelled by travellers aged between 25 and 40 years, who constitute 85 per cent of the inquiries, Policybazaar.ae, a UAE-based insurance market, said.

The global travel insurance market size is anticipated to reach $63.9 billion by 2030, according to a report by Grand View Research, Inc. The market is expected to expand at a CAGR of 15.4 per cent from 2022 to 2030.

Another industry forecast said global travel insurance will jump to $96.6 billion in 2033, recording a CAGR of 7.2 per cent from $48.2 per cent posted in 2023 as the total worldwide insurance market doubles in size from $5 trillion in 2023.

The research report said the demand for travel insurance is poised to skyrocket on account of growth in the tourism industry due to the factors such as easy internet travel bookings, extensive media coverage of various holiday types, an increase in disposable income, and enhanced package holidays.

Neeraj Gupta, CEO, Policybazaar.ae, said the rise in travel insurance inquiries reflects a dynamic shift in behaviour and an evolving mindset of travellers who now prioritise safety, preparedness, and the desire for seamless travel experiences.

“The travel insurance market in the Middle East is set to experience substantial growth. As per Spherical Insights, the global travel insurance market size is projected to reach $99.0 billion by 2030. This exponential growth underscores the increasing recognition of the importance of travel insurance,” said Gupta.

Policybazaar.ae has disclosed the top four travel destinations (either inquired or travelled by the UAE residents) for 2024: Azerbaijan, Georgia, USA, and Armenia. “The average travel duration for some of these trips is a minimum of nine days, reflecting a preference for shorter, more frequent vacations. This trend can be attributed to the extreme summer temperatures and the onset of summer holidays, prompting millions of families and individuals to seek cooler destinations for their summer breaks. Additionally, the shift towards online channels for purchasing travel insurance has encouraged insurers to reevaluate and innovate their long-term strategies,” Policybazaar.ae said.

“A notable trend observed is the rise in remote work, particularly among individuals below the age of 40. As more people blend work and leisure, the demand for comprehensive travel insurance is escalating. This trend is further supported by the increase in leisure travel, which amplifies the need for travel insurance to safeguard against unforeseen events that could disrupt travel plans,” it said.

The family travellers segment has emerged as the largest share of the market, accounting for 60 per cent and contributing significantly to market revenue. This segment highlights the importance of travel insurance in ensuring well-planned and risk-mitigated travel experiences for families. The need for enhanced travel insurance options for families is evident, as it enables better preparation and peace of mind for all family members.

According to Grand View Research, in terms of insurance coverage, the single-trip insurance coverage segment held the largest revenue share of 60.1 per cent in 2021 and is projected to expand at the highest CAGR of 16.0 per cent till 2033.

In terms of end-users, the senior citizen’s segment dominated the market in 2021 and is projected to expand at a CAGR of 13.9 per cent during the forecast period. This growth is attributed to the increase in numerous policy plans for senior citizens, such as Covid-19 insurance cover and emergency medical covers. In addition, services like emergency evacuation, subsidies in tickets, trip cancellation coverage, and coverage for luggage loss have a positive impact on the market.

The business travelers segment is likely to register the highest CAGR of 17.6 per cent during the forecast period. The surge in numbers of business trips in recent years and the increasing number of business travel insurance product offerings by the industry players are the key factors driving the growth of this segment. For instance, in March 2021, Travel Insured International launched a new product, Worldwide Trip Protector, to enhance various insurance policies for families, business and other travellers.