Travel cover market slow

 
Stephan Shakespeare
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THE need for comprehensive travel insurance has been highlighted this year by the Icelandic volcanic eruption and the travel chaos that ensued. The plight of Britons without adequate coverage – often examined in gruesome detail by the press this summer – has meant that we are more wary of the need for better safeguards when going abroad.

Despite these developments, figures show that of all categories of insurance, annual travel policies are the most likely to have been cancelled in the last two years. The chart shows that of those who said they have cancelled an annual travel policy at some point in the past, two-thirds did so during the recession.

What is driving this surge in travel insurance cancellations?

A new insurance report from YouGov SixthSense shows that policy-holders are most likely to cite “coverage-related” reasons (69 per cent) for policy cancellation rather than cost (23 per cent), suggesting that they manage to achieve a comparable level of cover elsewhere. Such consumer behavior could be attributed to the increased presence of current account providers in the travel insurance market.

Current account providers increasingly include annual travel insurance as part of their packaged accounts, thereby making standalone travel policies redundant for their customers.

Of those who have annual trip travel insurance, 34 per cent own packaged accounts; of those who opt for single trip travel insurance, only six per cent own a packaged account.

Seizing upon the increased media focus on the issue of travel insurance, the level of coverage is destined to become a greater selling point for packaged accounts.

This summer, Nationwide announced it was to revamp its FlexAccount, and now offers annual multi-trip European travel insurance to customers aged up to 65 who fund it with at least £750 each month.

Stephan Shakespeare is founder and chief executive of YouGov.