General insurers are already seeing a surge in travel insurance demands due to revenge travel after the travel industry was adversely impacted in the last couple of years due to the pandemic.
Insurers expect a ‘significant increase’ in demands for travel insurance cover in the next couple of months, especially for leisure travels on the back of the approaching summer season and more countries lifting all remaining Covid restrictions.
Earlier, the pandemic had led to a drastic fall in overall travel worldwide. Both business as well as leisure travel had experienced major setbacks. Insurance companies are now expecting significant traction in travel insurance demand and growth in premium income from this segment during the next financial year.
Moreover, there has been a shift towards enhanced coverage and longer trip duration in both retail and corporate segments due to risks and challenges associated with travelling, coupled with mandatory quarantine rules and travel bans restricting return to home countries.
“The company is expecting a significant traction in travel insurance demand. We have already seen upwards of 50% growth in travel insurance premium in FY21-22 compared to FY20-21 which is expected to further reach at least the pre-pandemic levels. While the travel insurance industry is still affected due to Covid in several parts of the globe and hence, the current fiscal year is expected to end at 50% of the pre pandemic travel insurance market,” said Sanjay Datta, chief – underwriting & claims, ICICI Lombard General Insurance.
Talking to FE, Datta said some tourism based countries have made travel insurance mandatory for travellers. And this will lead to an organic and long-term growth of the travel insurance industry. He, however, said business travel is expected to be sluggish in its revival due to restrictions or mandatory regulations enforced by various countries, safety concerns for employees and digital alternatives like video/audio conferencing among others.
Also, employers are cautious about the health of their employees and hence there has been shift towards lower age band employees travelling for business purposes instead of the higher age band or the vulnerable ones.
Notably, India is scheduled to resume commercial international passenger services from March 27, 2022.
“For especially holiday leisure travel, people might wait for a month or two for all the restrictions to be lifted and as the summer season approaches, the demand will pick up. Last couple of years the entire travel insurance segment had been almost at a standstill. Now that not only in India but for the rest of the world the situation is improving, Covid-related restrictions are slowly being relaxed and people are allowed to travel, I think it is only a matter of time, perhaps the maximum one or two months, before we see a significant increase in demand for travel insurance cover,” said Subramanyam Brahmajosyula, head – reinsurance & product development, SBI General Insurance.
According to Parag Ved, president and head, consumer lines, Tata AIG General Insurance, now more percentage of travellers are opting for travel insurance and some countries have made it mandatory or have highly recommended to have travel insurance before they enter those countries. Also, people are now purchasing higher sum-insured policies for adequate coverage, due to the fear of pandemic.
Ved said given the resurgence of Covid-19 infections in Asia and Europe, it remains to be seen how it will impact the sale of travel insurance going ahead. “However, since many countries still have their borders opened, we do expect travel insurance to continue selling,” he said.
Brahmajosyula informed as of now there is no trend of insurers not offering cover for travelling to China and South Korea, although currently there is fresh Covid surge in these Asian countries.
“Rather than increasing premiums for insurance cover for travelling to Russia and Ukraine, it is more likely that individual insurance companies may take a decision that temporarily they will not cover travel to these two countries now,” Brahmajosyula added.
Ved observed that to mitigate risks that arise with an increase in Covid cases, people do buy a higher sum insured travel insurance policy.
Tata AIG General Insurance has observed a similar case with corporate segments as well, as business travel is also directly affected by travel restrictions, and businesses want to ensure good health and well-being of their employees.
“There are many countries which have made compulsory travel insurance with a specific sum insured, and it will also lead to higher sum insured,” Ved added.
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