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The UK travel insurance market witnessed a 7.6% fall in 2011, to reach a value of £706.3 million, from £764.8 million in 2010, according to figures from the Association of British Insurers (ABI).
This fall in industry revenue can be attributed to two key factors; the continued low level of trips abroad and the increasing popularity of policies sold alongside added value accounts, where premiums can be a matter of a few pounds a month.
The total number of visits abroad by UK residents fell by 6.3% in 2010. This represents a drop from
58.6 million to 54.9 million. Foreign travel has seen a downturn since 2008, with an average rate of decline at 5.3% between 2006 and 2010.
AXA continued to hold the largest share of the travel insurance market in 2010, with 20.2%, representing a GWP of £154.3 million.
This was however both a decrease in GWP - down by 2% - and market share, with a 1.0% decline. Performance is expected to improve with a continued partnership with Lloyds TSB and the new account with TUI.
In 2011, the percentage of premium income generated from annual multi trip policies increased by 5.1 percentage points to account for 67.4% of travel insurance GWP. This recent growth is an extension of a pattern of steady growth in annual policy popularity over the last five years.
Travel insurance has widespread product penetration for a non-compulsory product, with only 8% of consumers not purchasing cover for their last overseas trip. This product penetration can be explained by increasing consumer awareness of the benefits of insurance as potentially high medical costs are highlighted in the press.
Conditions will remain competitive over the next five years, resulting in modest premium rate increases. The market will remain an attractive one in which to write business as a growth in the number of trips abroad is forecast to increase the number of policies sold.
For more information on the UK travel insurance market, see the latest research: UK Travel Insurance Market
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