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Travel Insurance and Assistance in South Africa

  • October 2013
  • -
  • Finaccord
  • -
  • 32 pages

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

- data spanning 2009 to 2013 for the underlying travel market with segmentations by type of journey (between holiday and business trips) and by destination country;

- data for the size of the market for stand-alone travel insurance and assistance in South Africa between 2009 and 2013 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 well over 100 actual and potential distributors of stand-alone travel policies;

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

- forecasts to 2017 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 segmentations as those specified above for the period from 2009 to 2013.

The report is accompanied by an Excel PartnerBASE™ dataset that details the travel insurance partnerships of each of the travel trade, transportation and financial organisations covered, 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 South Africa
0.0 EXECUTIVE SUMMARY 1
1.0 INTRODUCTION 3
What is this report about? 3
Rationale 3
This report updates and expands upon Finaccord's previous ground-breaking research 3
Methodology 3
Primary research 3
The survey includes well over 100 travel trade, transportation and financial organisations… 3
…and draws on a separate analysis of travel benefits linked to banking products 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 global travel insurance industry 5
Definitions 6
Terms and abbreviations 6
Types of packaged travel insurance and assistance 6
Operating models 7
Currencies, exchange rates and inflation 7
PartnerBASE and market data annexe 8
Finaccord 8
2.0 MARKET ANALYSIS 10
Introduction 10
Underlying foreign travel market 10
The volume of outbound road traffic is highly significant in this market 10
although the total number of foreign trips has yet to return to the peak levels seen in 2011 10
Destinations within Africa account for around 75% of all foreign travel by South African residents 12
Market for travel insurance and assistance 12
In real terms, the value of South Africa's travel insurance market is growing at around 4.5% per year… 12
…and an increasing proportion of travel policies take the form of annual or multi-trip cover 13
Distribution through travel trade, transportation and financial organisations 14
Summary of organisations researched 14
Provision rates 15
Virtually all traditional and online travel agents distribute travel insurance policies 15
although provision rates for stand-alone cover are much lower among banks 15
Operating models 16
Around half of South African travel agents work with more than one insurance provider 16
Competitor share of partnerships 18
The supply structure via the travel trade appears to be relatively concentrated 18
and TIC benefits from exclusive distribution agreements with a number of key players 18
although there is at least one relatively new market entrant 19
AIG has two key airline partnerships, one established directly and one via an intermediary 20
Absa Insurance is the only captive underwriter active in the bank distribution channel 21
Travel insurance and assistance linked to payment cards and bank accounts 22
The vast majority of credit card products feature one of more elements of travel insurance… 23
…although it is rare for travel cover to be included with debit cards or packaged accounts 23
Other distribution channels 24
Automotive clubs 24
Direct distribution by insurance underwriters 25
Around half of South Africa's leading non-life underwriters sell travel policies direct to the public 25
Online aggregators and brokers 25
Just one of South Africa's main insurance aggregators compares travel quotes 25
Other online brands 25
albeit a number of online brands distribute cover on behalf of Regent alone 25
Retailers 25
Retailers are not widely active in this field, with one or two exceptions 25
Other types of distributor 26
Forecasts 26
Underlying foreign travel market 26
The number of foreign holiday trips is expected to grow at around 3.5% per annum up to 2017 26
Market for travel insurance and assistance 27
In nominal terms, premiums are likely to exhibit annual growth of almost 10% in the coming years 27

LIST OF GRAPHICS / TABLES

0.0 EXECUTIVE SUMMARY 1
Key market data for travel insurance and assistance in South Africa, 2009, 2013 and 2017 2
1.0 INTRODUCTION 3
Travel insurance and assistance: how it all fits together 5
2.0 MARKET ANALYSIS 10
Number of foreign trips undertaken by residents of South Africa, segmented by purpose of trip, 2009 to
2013 11
Number of foreign trips undertaken by residents of South Africa, segmented by purpose of trip, 2009 to
2013 (table) 11
Destinations of foreign trips undertaken by residents of South Africa, 2012 12
Estimated gross written premiums and policy numbers for travel insurance and assistance in South Africa,
2009 to 2013 13
Estimated gross written premiums and policy numbers for travel insurance and assistance in South Africa,
2009 to 2013 (table) 14
Summary of travel trade, transportation and financial organisations researched in South Africa,
segmented by type, 2013 15
Provision rates for stand-alone travel insurance and assistance in South Africa, segmented by type of
travel trade, transportation and financial organisation, 2013 16
Operating models used for stand-alone travel insurance and assistance in South Africa, segmented by
type of travel trade, transportation and financial organisation, 2013 17
Operating models used for stand-alone travel insurance and assistance in South Africa, segmented by
type of travel trade, transportation and financial organisation, 2013 (table) 18
Competitor share of partnerships for stand-alone travel insurance and assistance in South Africa, 2013:
travel trade organisations 20
Competitor share of partnerships for stand-alone travel insurance and assistance in South Africa, 2013:
transportation organisations 21
Competitor share of partnerships for stand-alone travel insurance and assistance in South Africa, 2013:
financial organisations 22
Provision rates for travel insurance and assistance linked to payment cards and bank accounts in South
Africa, segmented by product function and level, and by type of cover, 2013 24
Forecast number of foreign trips undertaken by residents of South Africa, segmented by purpose of trip,
2017 26
Forecast number of foreign trips undertaken by residents of South Africa, segmented by purpose of trip,
2017 (table) 27
Forecast gross written premiums and policy numbers for travel insurance and assistance in South Africa,
2017 28
Forecast gross written premiums and policy numbers for travel insurance and assistance in South Africa,
2017 (table) 28

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