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As travel rebounds, so do travel insurance purchases. The pandemic has raised awareness about travel insurance over the past few years, which has boosted sales, and it’s not expected to slow down any time soon. Travel insurance sales are up 122% in 2022 compared to 2021 according to Squaremouth, a travel insurance comparator.
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Top travel destinations in 2023: Europe is gaining momentum
Mexico, Italy, Israel, the Bahamas and France are the top places travelers plan to visit in 2023, according to travel insurance sales data from Squaremouth.
Additionally, an analysis of travel insurance sales since 2019 shows that trips to major European destinations, such as Italy, the UK, France and Spain, are on the rise, says Megan Moncrief, carrier. Squaremouth word. “We expect these countries to regain popularity in 2023,” she says.
International travel is back, domestic travel spending is on the rise
Americans are eager to get abroad in 2023. International travel has returned to pre-pandemic levels, and Moncrief predicts that will continue in 2023.
It’s no surprise that people stayed closer to home during the height of the pandemic and favored countries with lenient travel restrictions. For instance, Turks and Caicos Islands trips were popular at the height of the pandemic as travel restrictions were less stringent.
Most European countries have relaxed or eliminated their Covid restrictions over the past year, making them more attractive to international travellers.
Sale of international travel insurance
The average cost of travel for travelers to the United States has increased every year since 2019. It rose from $2,896 in 2019 to $4,245 in 2022. That’s a 46% increase. Based on this trend, travelers are likely to continue to spend more on domestic travel in 2023, Moncrief says.
But the rise in the average cost of domestic travel doesn’t necessarily mean people are taking more lavish vacations. “Part of the reason for the increased cost of travel is due to inflation, gas prices, airfares,” says Moncrief. “In general, things cost more.”
Domestic Travel Insurance Sales
Increase in the number of baby boomer travelers
More baby boomers purchased travel insurance in 2022 than in 2021, indicating a resurgence in travel for the “gray tsunami” generation, says Angela Borden, spokeswoman for seven corners, a travel insurance company. The number of Seven Corners travel insurance plans purchased by people born between 1946 and 1964 increased nearly 54% year over year.
“What we’ve seen is that millennials haven’t retreated as much on travel during the pandemic because they’re younger and weren’t as worried about Covid,” Borden says. “But baby boomers have been without travel for so long, now they feel safe, and because they have time and money, we’re seeing a big rebound that should continue.”
Baby boomers are also planning trips to Europe after favoring tropical beach destinations during the pandemic, says Borden. The top two destinations for US baby boomers in 2022 were Italy and the UK, according to sales data from Seven Corners. In 2021, Mexico, the Turks and Caicos Islands and Costa Rica were the most popular. Italy was fourth a year ago.
The UK was not among the top five destinations in 2021, but was the No. 1 destination for US baby boomers in 2019. Borden says this change shows they are slowly returning to some of their travel habits. before the pandemic.
Covid remains top travel insurance concern, but declining
Travelers are still worried about Covid. Discovery travel insurance for covid was by far the top concern of US travelers purchasing travel insurance in 2019, 2021 and 2022.
In 2022, 31% of travel insurance buyers specifically searched for travel insurance plans that include Covid coverage and purchased a plan that covers Covid-related issues. This compares to 9% who did so for emergency medical coverage. Still, 2023 should show a slowdown in that trend, says Squaremouth spokesman Steven Benna.
“October was the first time since the emergence of Covid in March 2020 that we saw a decrease in searches for policies covering Covid,” observes Benna. “Covid is still the No. 1 concern, but it’s sinking.”
Benna also says he expects interest and sales from travel medical insuranceemergency medical evacuation insurance, travel cancellation insurance and trip interruption travel insurance to begin to approach pre-pandemic sales levels.
While Covid remains a top concern among travellers, travel delay benefits are poised to grow in popularity as flight cancellations and flight delays increase.
“Travel delays are becoming an increasingly common concern, and purchases reflect that. This trend will continue in 2023,” says Moncrief.
Trip delay insurance pays for necessities you may need during a delay caused by a reason stated in your policy. For example, if a storm delays your flight, you may be compensated for meals, a hotel room, and transportation during the delay.
‘Cancel for any reason’ travel insurance still important with baby boomers
“Cancellation for any reason” travel insurance (CFAR) is also down, and Benna predicts that CFAR popularity sales will approach pre-pandemic levels.
“Cancel for any reason” is an upgrade available on some policies that expands your ability to request a trip cancellation. If you have CFAR coverage, you can cancel for any reason not listed in the base policy and still get a refund for your lost deposits, often 75%. This feature provided a good escape hatch during the pandemic for travelers who wanted the most flexibility.
CFAR sales increased from 5% in 2018 to 21% in 2020 at the height of Covid. In 2022, only 7% of travel insurance plans included CFAR.
Percentage of travel insurance plans sold with CFAR
Since CFAR offers broader coverage, it also increases the cost of travel insurance by an average of 50%.
Borden of Seven Corners notes that baby boomers, who typically have higher disposable income than other age groups, could be the exception to CFAR’s declining sales in coming years. Seven Corners saw a 24% increase in CFAR coverage purchased by baby boomers in 2022.
Interruption for any reason travel insurance gains traction
Travel insurance “Interruption for any reason” (IFAR) is a relatively new offering. IFAR is an upgrade available on some travel insurance policies that allows you to return home sooner after a trip, regardless of the cause, and receive a partial refund. IFAR benefits provide 50% or 75% compensation for non-refundable travel expenses, depending on your policy.
You also need to be a certain time in your trip, like 48 or 72 hours. It adds an average of 3% to 10% to the cost of your travel insurance.
Although IFAR is not as widely available as CFAR, it is expected to gain traction with travelers in 2023 and beyond.
“IFAR will continue to grow in popularity as people learn more about it,” says Borden. “It’s relatively inexpensive and not as expensive as CFAR, and people will want that extra protection for the few extra dollars it will cost.”
Waiting longer to buy travel insurance
People are buying travel insurance much closer to their departure date than in the past.
“We’re seeing people wait longer to get travel insurance. It takes them about 50 to 60 days before they leave, and we’re seeing that trend continue for trips planned for 2023,” Moncrief says.
Sales data from Seven Corners shows baby boomers, in particular, are buying plans just 58 days before their 2022 departure date. That’s half of what was reported in 2019, when baby boomers Boomers bought travel insurance an average of 115 days before they left. trips, says Borden.
This trend is regrettable because there are many benefits of buying travel insurance right after booking your trip. It’s a good idea to get travel insurance within about 15 days of making your first travel deposit. This way you can maximize the length of time your cancellation benefits apply. And you won’t miss optional upgrades like CFAR and IFAR that require purchase soon after your initial travel deposits. You can also benefit from a waiver of exclusion of pre-existing medical conditions if you purchase your travel insurance policy shortly after booking your trip.
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