New Study Reveals Who Buys Travel Insurance Demand Triples; Higher Income, Education Play Roles
According to a new consumer study from the US Travel Insurance Association (UStiA), people who buy travel insurance tend to be more well-educated, travel more frequently and have higher household incomes than those who don’t.
Buying Influencers: Destination and Type of Trip
The survey showed that people are more likely to buy insurance when there are more factors out of their control. For example, consumers traveling overseas are three times more likely to buy insurance than those traveling within North America.
Travel insurance buyers are often doing one or more of the following: traveling with a group of people; taking longer trips; going on more expensive trips; or have considerable pre-paid non-refundable expenses. Also most travelers (70%) taking a cruise buy travel insurance. Other differences between those who purchase travel insurance and those who don’t are:
Reason for travel - Purchasers of travel insurance are more likely to have a destination or activity as part of their trip rather than visiting friends and relatives.
Sources of Information - Purchasers of travel insurance use more sources of information to plan their trip, while non-purchasers typically rely on friends and relatives as information sources. In fact, 77% of people using a travel agent to book their vacation bought travel insurance, which means they are twice as likely to purchase travel insurance as those who booked their own trips.
Why They Buy IT - The UStiA previously reported that prior to 9/11, only 10% of leisure travelers purchased travel insurance, while today more than 30% of leisure travelers buy it. When asked why, the top three reasons are: peace of mind, protection against the unexpected and concern over losing the financial investment in a trip.
Within these categories, respondents most frequently cited these motivating factors:
My trip was expensive.
I wanted protection for unforeseen events.
I want the peace of mind that travel insurance offers.
I want to get money back if I had to change my trip.
I had to pre-pay my trip.
"People are now more knowledgeable about the unpredictable nature of their everyday lives, which can be affected by natural disasters, terrorism or even an illness in their family, so they are drawn to solutions that will mitigate these problems," says Jon Ansell, UStiA Immediate Past President. "Savvy, experienced travelers know the value of travel insurance and assistance, and use it to improve their overall travel experience.
"At the same time, we are concerned about how few people realize their healthcare policies provide very little, if any, out-of-country medical coverage, and some don’t cover you if you are traveling more than 100 miles from home," Ansell noted.
The "If" Factor
Among non-purchasers, two-thirds say conditions could arise that would cause them to buy travel insurance. Reasons cited as possible motivating factors were terrorist acts, aging, unforeseen events, travel to foreign countries, lost baggage concerns, weather and protecting the cost of the trip.
Most Are Unaware of Medical Evacuation Services
The survey revealed that, while a majority of those who don’t buy travel insurance are familiar with flight and trip cancellation insurance, the vast majority are unaware of travel health insurance, baggage coverage and medical evacuation insurance. Even among travel insurance buyers, only 50% were aware of medical evacuation insurance.
Having to pay for a medical evacuation out of your own pocket can be financially devastating," Ansell said, noting that depending on the location and type of care needed, a medical evacuation can run in the tens of thousands of dollars and more.
One out of Six File Claims
The survey revealed that 17% -- or one out of every 6 persons – who buy travel insurance have actually filed a claim at some point. By comparison, the claim frequency rate for homeowners insurance in 2004 (last available date) was 7.3% -- or – one out of every 14 policyholders, according to the Insurance Information Institute.
The 2006 Travel Insurance Consumer Survey was conducted online in late 2005 of 850 people who had taken at least one leisure trip of one night or more in the last 12 months.
UStiA promotes fairness, integrity and a commitment to excellence in the travel insurance industry. With a mission to educate the public on travel insurance while maintaining high industry standards, the UStiA is a non-profit association of insurance carriers and allied businesses involved in the development, administration and marketing of travel insurance and assistance. In 2004, UStiA member companies provided travel insurance policies to more than 17 million people. Travel insurance is available from travel agencies, airlines, tour operators, hotels and resorts, and insurance brokers as well as through the internet. For more information on UStiA visit www.ustia.org.