Travel insurance trends emerge despite the COVID-19 pandemic
To date, Starr Insurance Companies has seen a year-over-year increase of 528% in the purchase of U.S. travel policies.
The coronavirus pandemic has brought unprecedented upheaval to the travel industry with cancellations, border closings and general uncertainty.
As countries push to gain the upper hand in the fight against the virus while economies also begin to reopen, our travel insurance data shows significant, near-term changes in consumer travel behaviors. Here is a look at the trends.
Shift to domestic travel
Americans’ appetite has grown dramatically for domestic travel. This trend reflects a global climate characterized by border restrictions and quarantines. To date, Starr Insurance Companies has seen a year-over-year increase of 528% in the purchase of U.S. travel policies. This is consistent with our company’s experience in other parts of the world.
In China, one of the first economies to re-open after their outbreak, our data shows that families are planning short-distance car trips rather than elaborate ventures, mirroring what we see in the U.S. We are also seeing a shift to more guided outdoor adventures, which is an appealing getaway to many after months staying home. People are eager to get out and travel but don’t want to go far, and they are more concerned about protecting their travel investment wherever and whenever they go.
New frugality
Domestic trips are generally less expensive than international ones, so insured trip costs are down 22% versus a year ago. We’ll see if this trend leads to a new frugality, or if people will begin to splurge even if they are not going far.
New demand for travel insurance
Our data shows that insurance is becoming an important purchase for younger travelers (age 35 and under), with sales to this age group up 14% from last year. Many younger customers are buying insurance for the first time through both the retail and wholesale channels. Travel writers and social media coverage increasingly portray travel insurance as a must-have.
Cancel for any reason in demand
The data shows a sharp increase in demand for “cancel for any reason” coverage. In response to the immediate crisis, the travel industry has responded to consumer demands and uncertainty with greater flexibility, refunds and vouchers — a trend that’s likely to continue until the public health crisis abates, at a minimum.
Medical coverage remains key
Insurance demand goes beyond trip cancellation. An illness during a trip may be a much larger and unanticipated expense, with claims often running into six figures. Also, unexpected large expenses for medical evacuation are often not covered by standard healthcare. If a traveler ever needs a medical evacuation, a relatively inexpensive domestic ski trip or hiking trip to the back-country could become a significant financial burden for anyone without appropriate travel coverage.
In spite of the caution we are seeing currently, Americans are eager to get out and travel. Customers are booking, and insuring, cruises for the end of 2020 and 2021 and overseas trips starting in 2021. The overall travel industry will meet consumer demand as it grows and deliver “trip of a lifetime” experiences to their customers.
Michael Grossman (Michael.grossman@starrcompanies.com) is director of leisure travel sales & distribution for Starr Insurance Companies. He has worked in the travel industry for over 25 years in segments including airline, tour operator, hospitality and OTA. This article is authored by and containing the opinions of Starr Insurance Companies; this article is offered solely for informational purposes.
Starr Insurance Companies (or Starr) is the worldwide marketing name for the operating insurance and travel assistance companies and subsidiaries of Starr International Company, Inc. and for the investment business of C. V. Starr & Co., Inc. and its subsidiaries.
Related: