travel insurance in europe and global trends in distribution channel usage

Travel Insurance in Europe and Global Trends in Distribution Channel Usage

© Finaccord Ltd., 2014 Web: www.finaccord.com, E-mail: [email protected] 1

Travel Insurance in Europe and Global

Trends in Distribution Channel UsagePresentation at the Uniglobal Conference 2014

Prague, December 4th 2014



Introduction

Travelling

• Trips abroad across Europe

• Key growth segments

Consumer behaviour

• Types of travel insurance bought

• Distribution channels and interfaces

• Leading providers through partnerships



For Europe as a whole, foreign travel is back to pre-

recession levels...

Number of foreign trips lasting four nights or more made by EU residents, 2004-2013 (million)

Source: Eurostat, UK ONS data, for 20 countries representing 83% of total EU trips abroad of four nights or more for 2012

100

120

140

160

180

200

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013



...but there are major variations by country

Year-on-year change in number of foreign trips of four or more nights by country, 2012-2013 (five

largest countries providing data plus maximum and minimum rates)

Source: Eurostat, UK ONS

27.1%

10.2%

4.8%

-2.7%

-9.5%

-13.8%

-19.5%

-30% -20% -10% 0% 10% 20% 30%

Belgium

Germany

UK

Netherlands

Spain

Italy

Slovakia



The top three countries make up half of the European

travel insurance market...

Estimated share of European travel insurance market, 2013 (total market value = EUR 3.38 billion)

Source: Finaccord analysis of 20 countries (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy,

Netherlands, Norway, Poland, Portugal, Romania, Russia, Spain, Sweden, Switzerland, Turkey, UK)

UK, 27.8%

Germany, 15.2%

Norway, 8.6%

Others, 48.5%


© Finaccord Ltd., 2014 Web: www.finaccord.com, E-mail: [email protected]

Germany

Norway

Russia

Turkey

UK

-5%

0%

5%

10%

15%

20%

0 200 400 600 800 1,000

Compound annual growth rate in premiums, 2009-2013

Gross written premiums for travel insurance, 2013 (EUR million)

6

...but they are mature, slow-growth markets

Source: Finaccord analysis of 20 countries (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Ireland, Italy,

Netherlands, Norway, Poland, Portugal, Romania, Russia, Spain, Sweden, Switzerland, Turkey, UK)



Travellers aged 65-plus are only 10% of the total in the UK...

Segmentation of foreign trips by age band, 2012

Source: ONS Travel Trends

0-15, 5.1%

16-24, 9.2%

25-34, 19.4%

35-44, 20.4%

45-54, 20.3%

55-64, 15.0%

65 and over, 10.6%



...but they are on the increase...

Compound annual growth in the number of foreign trips by age band, 2003 to 2012

-6.2%

0.1%

-1.0%

-1.8%

-0.6%

-0.3%

2.5%

-0.9%

-7.5% -6.0% -4.5% -3.0% -1.5% 0.0% 1.5% 3.0%

0-15

16-24

25-34

35-44

45-54

55-64

65 and over

All visits




...and are the most important segment in the cruising market

Segmentation of fly / cruise (stay-on-board) trips by age band, 2012


0-15, 1.5% 16-24, 2.0%

25-34, 4.4%

35-44, 5.1%

45-54, 22.5%

55-64, 32.1%

65 and over, 32.5%



Demographics imply that the segments of older and

richer travellers are the main growth areas...

Quantum of the Seas: 348 metres long, 16 decks, 4,905 passengers



...with cruise ships getting more innovative as well as larger

Dodgems! Robot bartenders!

Skydiving and surf

simulators!



Analysis from Travel Metrics consumer research reports

released in July 2014

• Coverage of Australia, Canada, France, Germany, Italy,

Spain, UK and US

• 1,000 consumers surveyed in first seven countries,

2,000 in the US

• Results show unweighted averages across all eight

countries plus maximum values recorded in any single

country

Global trends in consumer behaviour



German consumers are most likely to travel

domestically and abroad...

% of respondents that travelled abroad or within their own country for a week or more, 2014

Source: Finaccord Travel Metrics reports for Australia, Canada, France, Germany, Italy, Spain, UK and USA

Abroad only (for any period) – 14.2%

(maximum value: Canada – 31.6%)

Own country only (for a week or

more) – 22.3% (maximum value:

Australia – 30.1%)

Both abroad (for any period) and

in own country (for a week or

more) – 35.0% (maximum value:

Germany – 53.2%)

No – 28.5%

(maximum value: US – 54.7%)



...while UK travellers are most likely to take out

travel insurance

Propensity of consumers travelling abroad to acquire travel insurance, 2014

Yes – 69.2%

(maximum value: UK – 89.7%)

No – 30.8%





Single-trip policies remain the most

common type of policy...

Types of travel insurance acquired by all travelling consumers, 2014

Note - analysis includes some travellers with more than one kind of policy


Single-trip policy – 46.6%

(maximum value: Australia

– 68.1%)

Annual policy – 20.5%

(maximum value: Germany – 43.9%)

Automatic policy in price of

holiday or travel ticket – 14.1%

(maximum value: Italy – 27.9%)

Automatic policy with credit card

or bank account – 18.8%

(maximum value: France – 47.2%)



...and 80% of these are standard consumer policies

Note – non-standard consumer policies include specialist backpacker, domestic-only, expatriate, gap-year or student, older

traveller, pre-existing medical condition and winter sports policies


Standard consumer policy – 79.5%

(maximum value: Germany – 88.1%)

Business policy – 4.0%

(maximum value: Spain – 5.9%)

Non-standard consumer policy – 16.6%

(maximum value: UK – 28.5%)



More expensive policies cost more for a reason

• Customers with annual policies are more than twice as

likely to make a claim as those with single-trip policies

• The lowest claims frequency comes from policies

included automatically with holiday bookings or with

payment cards and bank accounts

• Customers with non-standard policies are more than

three times as likely to claim as those with standard

ones



Travel agents and tour operators remain the

main distribution channel in Italy

Distribution channels used to acquire stand-alone travel insurance, 2014

Direct from insurer – 38.7%

(maximum value: Australia –

51.8%)

Airline – 14.0%


Bank – 7.4%


other – 20.2%


Travel agent or tour operator – 19.7%

(maximum value: Italy – 27.3%)

Note – other distribution channels include automotive associations, cashback websites, employers, insurance aggregators,

insurance brokers, the Post Office, and supermarkets or other retailers




Munich Re has the most partnerships among travel

trade, transportation and financial organisations

Share of partnerships across 20 European countries by ultimate holding company, 2012

Source: Finaccord Travel Insurance and Assistance in Europe report, 2012

Munich Re, 13.3%

Allianz, 12.3%

Generali, 10.1%

AXA, 2.9%

HanseMerkur, 2.2%

other, 59.2%



Spanish customers still prefer to take out travel

insurance face-to face...

Distribution interfaces used to acquire stand-alone travel insurance, 2014

Face-to-face – 36.3%


Online – 52.5%


Phone or post – 11.2%





...and are also the most likely to use tablets and

mobile phones when buying online

Laptop / desktop – 88.7%

(maximum value: Canada –

92.5%)

Tablet – 8.2%


Mobile phone – 3.0%





Little variation for interfaces by age, but online

rises and face-to-face falls with income

Distribution interfaces used to acquire stand-alone travel insurance, 2014, segmented

into three income bands


42%

37%

27%

43%45%

50%

16%19%

23%

0%

10%

20%

30%

40%

50%

60%

Low income Medium income High income

t Face-to-face Online (laptop or desktop) Phone and post t



Any questions?


© Finaccord Ltd., 2014 Web: www.finaccord.com, E-mail: [email protected]

Finaccord is a leading market research, publishing and consulting company specialising in financial

services. We provide our clients with insight with a particular focus on marketing and distribution

strategies, including affinity and partnership marketing.

Our areas of expertise include: affinity and partnership marketing; automotive financial services;

bancassurance; commercial non-life insurance brokers; consumer intelligence; extended warranties

and insurance for white, brown and grey goods; home emergency insurance and assistance;

insurance and assistance linked to payment cards and bank accounts; mobile gadget and phone

insurance; professional indemnity insurance; retailer payments, banking, insurance and assistance;

road assistance; small business insurance; trade credit insurance; and travel insurance and

assistance.

Our international network of consultants is able to deliver information quickly and accurately across a

range of countries worldwide, basing research projects on robust data and knowledge.

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