Travel insurance market projected to reach $94.66 billion by 2032

The global travel insurance market is projected to expand from US$28.87 billion in 2024 to $94.66 billion by 2032, reflecting a compound annual growth rate (CAGR) of 16% during this period, according to Industry Today. This substantial growth is primarily driven by the resurgence of global tourism following the Covid-19 pandemic and a heightened awareness among travellers regarding the importance of insurance coverage for unforeseen events.

Market growth drivers and opportunities

Several key factors are contributing to the rapid expansion of the travel insurance market:

1. Post-pandemic tourism boom: as global travel restrictions ease, there has been a significant uptick in both domestic and international travel
2. Increased traveller awareness: the experiences during the pandemic have made travellers more conscious of the uncertainties associated with travel
3. Technological advancements: online platforms and mobile applications allow travellers to compare policies, customise coverage, and make instant purchases, thereby enhancing the accessibility and convenience of obtaining travel insurance
4. Mandatory insurance requirements: several countries have implemented regulations requiring travellers to possess valid travel insurance as a prerequisite for entry. This mandate has directly contributed to the growth of the travel insurance market, as travellers comply with these requirements to ensure seamless travel experiences.

Country-level analysis

1. US: the US market has experienced significant growth, driven by a robust travel culture and increasing awareness of the benefits of travel insurance. The presence of major insurance providers and technological advancements in policy distribution have further propelled market expansion
2. Germany: in Germany, a strong emphasis on risk management and a well-established insurance sector have contributed to the widespread adoption of travel insurance. The country’s robust outbound tourism sector also plays a crucial role in market growth
3. China: China’s burgeoning middle class and increasing disposable incomes have led to a surge in both domestic and international travel. This trend, coupled with growing awareness of travel-related risks, has resulted in a rapidly expanding travel insurance market
4. UK: the UK travel insurance market is mature, with high penetration rates. The market’s growth is supported by a strong tradition of international travel and a well-regulated insurance industry that ensures consumer trust.

Travel insurance market segmentation

Based on insurance coverage

The single-trip travel insurance sector, holding a 60.1% market share, leads the industry and is expected to grow at the fastest CAGR of 16.0%, according to the research. This growth is driven by services like emergency dental care, personal liability, baggage loss, and trip interruptions. Industry Today also projects the annual multi-trip travel insurance segment to grow at a 15.3% CAGR.

Based on the distribution channel

The insurance firms sector led the market with 34.8% of total revenue and is expected to maintain this position throughout the forecast period. This growth is driven by factors such as increased risk consolidation among policyholders and premium pricing based on event probability. Additionally, the banks segment is projected to have the highest CAGR of 18.0%, fuelled by rising insurance sales and underwriting in regions like Europe, Asia, and Australia.

David Bowles and Grace Cuddihy from Finaccord recently took a close look at global travel insurance markets in the wake of Covid-19.