The number of travel insurance industry providers has increased 24% over the past two years despite a decline in overseas journeys, according to a new report.
The Travel Insurance Report, published today by financial research company Defaqto, states that the number of travel insurance industry providers has increased from 176 in 2009 to 218 currently.
Defaqto's report also shows that the number of travel insurance products - across single trip, annual and extended stay policies - has jumped by 12% in the last two years, from 930 in 2009 to 1,047 in 2011.
The average number of travel insurance policies per provider has increased significantly, from 1.35 for single trip and 1.40 for annual trip cover in 2004 to 1.84 and 1.87 policies respectively this year.
However with Office for National Statistics data showing that the number of overseas visits by UK residents fell by over 21% between 2006 and 2010, the report suggests that the market is oversupplied, creating potential for customer confusion.
With customers remaining reluctant to spend on overseas travel due to the current economic climate, the industry faces significant challenges in relation to generating and retaining business.
Nevertheless, the report concludes that the travel insurance market is still an attractive proposition for providers.
Defaqto insight analyst for general insurance Mike Powell said: “Despite the reduction in customer numbers in the travel insurance market, product choice remains vast. We have seen the number of policies and providers increase significantly in recent years, which has created a situation where the travel market is oversupplied. While this means more choice for travellers, it also potentially creates greater customer confusion.
“A key driver for this market growth has been providers’ move towards a multiple cover approach, where they offer customers a range of policies to choose from each with a different level of benefits. Although the market appears buoyant, the travel insurance sector is facing tough economic conditions. Until the economic uncertainty eases, and customer numbers pick up again, the industry will have its work cut out.”
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