The Australian travel insurance market is forecast to contract by 7.7 per cent in 2020, off the back of the reimposition of domestic travel restrictions.
Data and analytics company GlobalData released its forecast for the beleaguered sector on Tuesday, revealing travel insurance is forecasted to grow at a compound annual growth rate of just 0.2 per cent during 2019 to 2024, mainly due to ongoing restrictions on international travel.
“The recovery of travel insurance is likely to be challenging and will depend on the success of containing the pandemic in Australia and rest of the world,” GlobalData insurance analyst Deblina Mitra said.
“Even after the possible economic recovery expected from 2021, the growth of travel insurance is likely to be a subdued one.”
The contraction in the market of 7.7 per cent this year represents a sharp decline from the 46.3 per cent growth witnessed in 2019, with insurers also bracing for refunds on planned trips and flights.
“Leading insurers such as Insurance Australia and Allianz are providing full refunds for policies falling in the lockdown period,” GlobalData noted.
“This is expected to put further pressure on the industry profitability, which is already facing challenging environment.”
The forecast coincided with the release of the World Travel & Tourism Council’s SafeTravels protocols for insurance, which have been designed to rebuild global consumer confidence to help “encourage the return of travelling”.
The guidelines, according to the WTTC, provide practical insights and guidelines around insurance for the travel and tourism private sector to equip its members with the knowledge of risks, what insurance coverage they need to look for, and how to attain appropriate coverage for their needs.
WTTC president and chief executive Gloria Guevara said: “Insurance is vital for travellers to have peace of mind and confidence to travel.
“We have worked closely with key players across the travel insurance industry to make recommendations to ensure individual travellers, groups and organisations can feel safe and confident enough to travel, sure in the knowledge they have the protection they need.
“The measures outlined in our insurance guidelines should help guide travel insurers to create products which contain every contingency needed offer reassurance to enable travel to recommence to those countries which have relaxed their border controls and travel restrictions.”
Among the key measures announced in its insurance guidelines, WTTC recommends insurers ensure audits identify and source the right partners and providers to ensure appropriate coverage.
Insurers are also encouraged to create blanket insurance and crisis management coverage to give comfort to customers, and provide a minimum base of mandatory coverage for risks posed by COVID-19.
Furthermore, insurers should also ensure there is enhanced awareness of the terms and conditions, restrictions, and coverage limits of insurance products or policies, or both.
For more information in the new guidelines, click here.
Featured image source: iStock/Lighthousebay
