An increase in business travel spending is projected to provide immense growth opportunities for the travel insurance market in the near future. Business travel spends have shown continuous growth ever since 2009 economic slowdown. The rise in business travel spend is attributed to factors such as growth in traveler volume and upsurge in pricing growth-rate.
According to Global Business Travel Association (GBTA)
, the business travel expenditure in the U.S. is expected to increase by 3.7% in 2016. Pricing points such as airfares, hotel, car rentals, bookings, and other secondary expenses have witnessed an increase of nearly 4-6%. Corporations have the responsibility of their employees while travelling. Therefore, more companies are taking efforts to ensure safety of their employees. Recent incidences of outbreaks of Zia virus, Ebola virus, terrorist attacks in Paris have resulted in an increase in purchase of travel insurance policies by those traveling to Africa and Europe.
Coverage for travel insurance varies according to the age and destination of travel. Generally, business travelers purchase annual multi-trip as well as single trip policies. The policies bought by this segment largely cover for trip cancellation, delays, loss of luggage, loss of passport and other documents. A growing trend for policy cover for medical evacuation that pays for treatment and transportation of travelers in case of life threatening illness or injury has also been witnessed. The market players
are increasing their travel insurance offerings so as to best fit the requirements of the business travelers.
With regards to business travel, Asia is the world’s biggest market and it accounts for 38 percent of the total annual expenditure. Likewise, Europe also witnesses positive business travel growth and is expected to continue to witness the same in the coming years. Similarly, an increase in travel expenditure by companies is observed in the U.S. For instance, in 2015 it was observed that 63% of American firms increased their travel budgets and they are identified to further increase travel expenditure during the forecast period.
Enhanced travel options and advance technological access has made business travelers access to insurance companies easier, thereby improving the adoption rate of travel insurance. In addition to this a concept of “Bleisure”- a portmanteau of business and leisure is a recent trend in business travel, which has widely propelled the growth of the travel insurance market. Majority of business travelers mix pleasure with their business trip, while the remaining extend business trips for vacation. In 2014, a report published by BridgeStreet Global Hospitality on “bleisure” revealed that 20% of 35 to 64 year olds travelers combined a business trip with a leisure holiday. Moreover, 94% of travelers under 35 years of age were more or equally expected to take a “bleisure” trip in the next five years. Key leisure activities taken by millennial business travelers include local sightseeing, dining out, sporting events, art galleries and museums. Old business travelers are more likely to invite their family members while on business tour. The additional cost of insurance coverage consisting of coverage for family members, and activities such as sports is paid by business travelers themselves.
Other users of travel insurance include family travelers, students, backpackers, senior citizens, and fully independent travelers. With the baby boomers approaching retirement age in the near future, the senior citizen travel insurance market would continue to be one of the fastest growing areas of tourism. Expendable income, less home responsibilities, and relatively good health lead to increase in number of senior citizen travelers. Fully independent travelers and backpackers would also register a significant CAGR during the forecast period.