04 Jun 2020
Posted in Banking
Travel insurers face extended disruption after summer holidays cancellations
Travel insurers will face severe disruption as holiday cancellations will continue well beyond the end of national lockdowns. GlobalData’s 2019 UK Insurance Consumer Survey found that 86.0% of respondents cited that their reason for purchasing travel insurance was for holidays.
Although lockdown measures are being eased, travel disruption continues. A large proportion of flights are being cancelled and popular holiday destinations such as Spain and Italy are introducing quarantine measures for international travelers.
GlobalData’s senior insurance analyst Beatriz Benito comments: “The summer season is approaching, but our COVID-19 Tracker Consumer Survey finds that consumers continue to postpone or cancel trips despite the easing of lockdown measures. In the week commencing 5 May 2020, just over half (51.0%) of UK respondents stated they had either cancelled or changed upcoming international travel plans, compared to the 31.0% that upheld their plans to travel internationally.”
In China, where no COVID-19 deaths have been registered for a month, 74% of respondents had cancelled or changed upcoming domestic travel, while the proportion was slightly higher for international travel. This indicates that it will be some time after reaching the pandemic peak before the willingness to travel returns.
Benito continues: “Restoring consumer confidence will take time. Travel insurers can expect their return on premiums to stay low in the near future. Travel insurance sales will remain compromised as many airlines are not expected to resume all of their flights straightaway.”
In addition, prospects are further aggravated as airlines anticipate low passenger capacities as flights are resumed, while the prospects of introducing social distancing measures onboard – such as blocking the middle seats – would further compromise travel insurance sales.
Benito concludes: “As the coronavirus is set to cause further chaos during summer seasons, travel insurers are unlikely to rebound from the crisis any time soon. Recovery of the travel insurance market will come hand in hand once customers feel safe and financially secure.”