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Travel Insurance and Assistance in Australia

  • February 2016
  • -
  • Finaccord
  • -
  • 38 pages

Finaccord’s report titled Travel Insurance and Assistance in Australia is about the current status and likely future development of the market for stand-alone travel insurance policies in Australia. It includes the following unique features:

- data spanning 2011 to 2015 for the underlying travel market with a segmentation by type of journey (between holiday and business trips) and with related commentary concerning the popularity of different overseas destinations;

- data for the size of the market for stand-alone travel insurance and assistance in Australia between 2011 and 2015 in terms of premiums and policies, with a segmentation between single-trip and annual cover;

- analyses of the share of distribution relationships of travel insurance providers split between travel trade, transportation and financial organisations, based on a primary survey of over 170 actual and potential distributors of stand-alone travel policies including airlines, banks, insurance brands and specialised lenders, plus both traditional and online travel trade entities;

- a review of other direct and affinity distribution channels used in Australia including automotive clubs, direct sales, online aggregators, other online brands and retailers, plus cover packaged with payment cards and bank accounts;

- estimates for the market share of travel insurance and assistance gross premiums for the top ten underwriters of this type of cover in Australia in 2015 with these data points expressed as a percentage range (e.g. 5.0% to 7.5%);

- forecasts to 2019 for both the underlying travel market and for the size of the market for stand-alone travel insurance and assistance in terms of premiums and policies, with the same segmentation as that specified above for the period from 2011 to 2015.

The report, which represents an update and expansion to a previous Finaccord study on the subject, is accompanied by an Excel PartnerBASE™ dataset that details the travel insurance partnerships identified, plus a convenient market data annexe, also in Excel format. This annexe can be used as a convenient source of data already in Excel format which means that there is no need for users to re-enter data from the PDF report into their own Excel worksheets.

Table Of Contents

Travel Insurance and Assistance in Australia

00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
Rationale 3
This report builds upon Finaccord's previous ground-breaking studies about this topic 3
Methodology 3
Primary research 3
The survey includes over 170 travel trade, transportation and financial organisations 3
including airlines, banks, insurance brands and both traditional and online travel trade entities 4
Market data 4
External sources 4
Travel insurance and assistance: how it all fits together 5
The term 'travel insurance' can refer to protection from a heterogeneous range of risks… 5
and assistance companies play a fundamental role in the travel insurance industry 5
Definitions 6
Terms and abbreviations 6
Types of packaged travel insurance and assistance 6
Operating models 7
Weighted shares 7
Currencies, exchange rates and inflation 8
PartnerBASE 8
Finaccord 8
20 MARKET ANALYSIS 10
Introduction 10
Underlying foreign travel market 10
A weakening economy has caused slower growth in overseas trips in recent years 10
Australians habitually travel to a wide range of destinations across multiple continents 12
Market for travel insurance and assistance 12
The market grew steadily in value between 2011 and 2015… 12
… with annual policies rising at a faster rate than single-trip policies 13
Distribution through travel trade, transportation and financial organisations 15
Summary of organisations researched 15
Provision rates 16
Over three quarters of potential distributors actually do promote stand-alone travel cover… 16
…with traditional travel trade entities still very likely to have one or more partnerships 16
Operating models 18
A majority of distribution partnerships are organised via a single external underwriter 18
Competitor share of partnerships - travel trade entities 21
Travel insurance specialist Cover-More holds the highest number of partnerships … 21
…with Allianz Global Assistance, Cerberus Special Risks and QBE also appearing frequently 21
The weighted analysis heightens the prominence of Cover-More and Great Lakes Australia 21
Competitor share of partnerships - transportation organisations 23
12 airline partnerships are shared across seven different providers… 23
…with three of these closely ranked in the weighted analysis of partnerships 23
Competitor share of partnerships - financial organisations 25
Allianz Australia is the most active insurer in this category by a significant margin… 25
…although others also have partnerships as well as selling travel cover directly… 25
… including two subsidiaries of Suncorp Group… 25
… which are ranked third and fourth in the weighted analysis of partnerships 26
Travel insurance and assistance linked to payment cards and bank accounts 28
Just under a half of credit card products feature comprehensive travel cover… 28
…but levels of provision vary greatly between standard and premium cards 28
Other distribution channels 30
Automotive clubs 30
Six of the seven major automobile clubs make use of the same underwriter… 30
… with RACT the odd one out in this context 30
Direct distribution by specialist travel insurers 30
The major specialist travel insurers all distribute directly online 30
Online aggregators and brokers 30
Travel insurance can be bought from a number of online aggregators 30
Other online brands 31
Allianz and underwriters at Lloyd's of London distribute insurance online through numerous tied agents 31
Retailers 31
Priceline and Woolworths both have travel insurance distribution arrangements in place 31
Other types of distributor 32
Several types of affinity and corporate partner are also used to distribute travel cover… 32
… including professional associations, travel guides and travel money providers… 32
… as well as Australia Post 32
Leading competitors 32
The market leader is believed to control at least one third of gross premiums in this field… 32
…which makes it roughly double the size of the second-ranked competitor 33
World Nomads Group was acquired by health insurer nib in 2015 33
There is a moderately long tail of smaller competitors led by QBE and AIG 33
Forecasts 35
Underlying foreign travel market 35
Overseas trips will increase slightly more rapidly in the years leading up to 2019… 35
Market for travel insurance and assistance 37
… thereby helping Australia's travel insurance market to grow in value at a faster rate 37
LIST OF GRAPHICS / TABLES
00 EXECUTIVE SUMMARY 1
Key market data for travel insurance and assistance in Australia, 2011, 2015 and 2019 2
10 INTRODUCTION 3
Travel insurance and assistance: how it all fits together 5
20 MARKET ANALYSIS 10
Number of foreign trips undertaken by residents of Australia, segmented by purpose of trip, 2011 to 2015 11
Number of foreign trips undertaken by residents of Australia, segmented by purpose of trip, 2011 to 2015 (table) 11
Destinations of foreign trips undertaken by residents of Australia, 2014 12
Estimated gross written premiums and policy numbers for travel insurance and assistance in Australia, 2011 to 2015 14
Estimated gross written premiums and policy numbers for travel insurance and assistance in Australia, 2011 to 2015 (table) 15
Summary of travel trade, transportation and financial organisations researched in Australia, segmented by type, 2015 16
Provision rates for stand-alone travel insurance and assistance in Australia, segmented by type of travel trade, transportation and financial organisation, 2015 17
Operating models used for stand-alone travel insurance and assistance in Australia, segmented by type of travel trade, transportation and financial organisation, 2015 19
Operating models used for stand-alone travel insurance and assistance in Australia, segmented by type of travel trade, transportation and financial organisation, 2015 (table) 20
Partnerships with travel trade organisations offering travel insurance and assistance in Australia, 2015: weighted and unweighted competitor share 22
Partnerships with transportation organisations offering travel insurance and assistance in Australia, 2015: weighted and unweighted competitor share 24
Partnerships with financial organisations offering travel insurance and assistance in Australia, 2015: weighted and unweighted competitor share 27
Provision rates for travel insurance and assistance linked to payment cards and bank accounts in Australia segmented by product function and level, and by type of cover 29
Individual competitors' estimated market shares of gross written premiums and other revenues for stand-alone travel insurance and assistance in Australia, 2015 34
Individual competitors' estimated market shares of gross written premiums and other revenues for stand-alone travel insurance and assistance in Australia, 2015 (table) 35
Number of foreign trips undertaken by residents of Australia, segmented by purpose of trip, 2019 (forecast) 36
Number of foreign trips undertaken by residents of Australia, segmented by purpose of trip, 2019 (forecast) (table) 36
Gross written premiums and policy numbers for travel insurance and assistance in Australia, 2019 (forecast) 37
Gross written premiums and policy numbers for travel insurance and assistance in Australia, 2019 (forecast) (table) 38

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