US Travel Insurance Market to Secure Valuation of USD 21.15 Billion By 2032 at a CAGR of 18.14% CAGR from 2024 to 2032: Astute Analytica

The U.S. travel insurance market is experiencing a surge in demand, with Americans increasingly valuing financial and medical protection while abroad. Sales are nearing $4.79 billion annually, driven by concerns over safety, health coverage, and the rising popularity of international travel.

New Delhi, May 20, 2024 (GLOBE NEWSWIRE) — The US travel Insurance market is projected to attain a market valuation of US$ 21.15 billion by 2032 from $4.79 billion in 2023 at a CAGR of 18.14% during the forecast period 2024–2032.

The travel insurance market in the United States is experiencing a robust period of growth. Annually, Americans are investing nearly $4 billion in travel insurance, a testament to the rising concern over travel-related risks. This heightened sense of caution is reflected in the fact that nearly half of Americans report increased anxiety about traveling, yet a resilient spirit prevails as most indicate that their travel plans remain unaffected. As per Astute Analytica, the landscape of travel is punctuated by uncertainties, with one in six Americans experiencing disruptions due to illness or natural disasters. Despite these challenges, the average American is embarking on 2.4 trips, predominantly within the domestic sphere. The coverage net of travel insurance is widening, with more than 148 million individuals now under its umbrella, marking a near 15% surge in sales. When selecting international destinations, safety and security concerns are prioritized over health issues, indicating a shift in the traveler’s mindset.

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The financial commitment to travel insurance is on an upward trajectory, with expenditures surpassing $1.3 billion. The demographics of those seeking insurance reveal that higher income and education levels are influential factors, with a threefold increase in demand observed. In the past year, approximately 80% of US adults have traveled for non-business purposes, with the majority of insured travelers (56%) spending $1,000 or less on their trips. The primary motivator for 35% of insured travelers is the fear of flight delays or reservation changes, highlighting the desire for assurance against logistical uncertainties.

Consumer Behavior with Demographic Analysis Paints A Promising Picture of US Travel Insurance Market

Interestingly, 38% of travelers have opted for insurance coverage, with the average policy cost ranging between $80 and $160 for a $2,000 trip. The preferred method of purchase is through travel providers, as evidenced by 55% of insured travelers. The practical use of travel insurance market is not uncommon, with 18% of policyholders filing a claim. Additionally, credit card travel insurance features are utilized by a third of respondents, offering a convenient alternative to traditional insurance products. Despite these trends, a significant 62% of travelers have not purchased travel insurance, though 68% express a willingness to consider it for future trips. The year 2023 saw Americans spend nearly $4.79 billion on various travel protection services, with online channels accounting for more than half of this consumer expenditure. The coverage landscape expanded to protect around 77 million people through over 49.3 million plans, marking a 17% increase from 2019. The majority of these plans, approximately 89%, were for trip cancellation/interruption packages, underscoring the importance of this coverage type.

Medical evacuation insurance, which represents about 6.3% of sold plans, covers the significant costs associated with emergency transport due to medical crises. The ‘Cancel for any reason’ (CFAR) coverage, although it can increase the insurance cost by nearly 50%, remains a popular add-on for its flexibility. The single-trip insurance segment is particularly dominant, claiming a 77.49% market share.

Senior citizens are a key demographic, contributing a substantial revenue, while the business travel insurance segment also holds a significant market share.

Key Findings in US travel Insurance Market

Market Forecast (2032) US$ 21.15 Billion
CAGR 18.14%
By Type Individual Insurance (77.49%)
By Risk Coverage Medical Cover (52.60%)
By Trip Type   Comprehensive Travel (30.51%)
By Destination International (67.74%)
By Distribution Channel Insurance Intermediaries (29.63%)
By End User Travelers (80.83%)
Top Trends
  • Travelers are increasingly seeking policies tailored to their specific needs, including niche travel segments and unbundled insurance products
  • Use of digital platforms for distribution, along with the integration of AI, machine learning, and blockchain technology, is revolutionizing the market
Top Drivers
  • Increased Consumer Awareness
  • Rise of insurtech companies and the adoption of advanced technologies have made purchasing and managing travel insurance more accessible and efficient
Top Challenges
  • Navigating the complex and often strict regulations across different regions can be challenging for travel insurance providers
  • ome travelers may not perceive the value in purchasing travel insurance, especially if they have flexible travel arrangements or misunderstand the coverage details

Rise of Individual Travel Insurance in the United States, Contribute Over 77% Market Revenue: Factors Driving Demand

In recent years, the United States travel Insurance market has witnessed a significant shift in the travel insurance landscape, with a notable increase in the demand for individual travel insurance policies compared to group travel insurance. This trend can be attributed to a confluence of factors that have reshaped the way Americans travel and perceive the importance of travel protection. One of the primary drivers behind this shift is the growing popularity of solo travel. A recent survey by Booking.com revealed that 40% of global Baby Boomers have embarked on a solo trip in the last year, with 21% planning to do so in the future. This trend, coupled with the rise of business travel, which often requires personalized coverage tailored to specific travel needs, has significantly contributed to the demand for individual travel insurance policies. The Global Business Travel Association projected that U.S. business travel spending would reach $347.5 billion in 2022, further underscoring the importance of individual travel insurance in this segment.

Another key factor behind this growth of the travel Insurance market is the desire for customization and flexibility in travel insurance coverage. A survey by Squaremouth indicated that 70% of travelers prefer policies that can be tailored to their specific needs, such as “Cancel For Any Reason” coverage. Individual travel insurance policies often offer more comprehensive coverage for international travel, including international health insurance, which is less commonly found in group policies. This is particularly relevant given the 6% increase in international travel by U.S. residents in 2019, as reported by the U.S. Department of Commerce.

  • The convenience of purchasing individual travel insurance through online booking platforms has also played a significant role in driving demand in the travel Insurance market. Statista reports that 82% of travel bookings in 2018 were made without human interaction, with many platforms offering the option to add individual travel insurance at the point of sale. This ease of access, combined with growing consumer awareness about the risks of travel interruptions, as suggested by the U.S. Travel Insurance Association (USTiA), has led to more travelers proactively seeking out individual insurance products.
  • Age-specific coverage needs have also contributed to the rise in individual travel insurance demand. The senior segment of travelers, which is growing, often requires more comprehensive medical coverage. The Centers for Disease Control and Prevention (CDC) recommends that older travelers have travel insurance, as Medicare may not provide coverage outside the U.S. Similarly, the adventure travel sector, which is growing at a rate of 65% year over year according to the Adventure Travel Trade Association, has seen an increase in travelers seeking individual policies that cover specific activities that may not be included in standard group policies.

Securing Peace of Mind: The Rising Tide of Comprehensive Travel Insurance in the US, to Continue Dominating with Over 30.51% Market Share

The demand for comprehensive travel insurance market in the United States has surged, with a AAA Travel survey indicating that 31% of U.S. travelers are more likely to purchase travel insurance in the wake of the pandemic. This heightened awareness has translated into a robust increase in travel insurance sales, with AAA noting a double-digit year-over-year growth. The primary driver behind this surge is the travelers’ need for financial security, with 69% of them identifying the ability to cancel a trip and receive a refund as the most important benefit of travel insurance. In response to the pandemic, insurance providers have expanded their offerings to include coverage for COVID-19-related losses, previously excluded under many policies. This has been a significant factor in the increased uptake of travel insurance. Moreover, 60% of Americans now see the benefit of consulting travel agents, who often advocate for comprehensive travel insurance as part of the travel planning process.

The study of the travel Insurance market further reveal that 38% of Americans are likely to purchase travel insurance for future international travel, with 88% emphasizing the importance of getting their money back if they cancel their trip. AAA’s travel insurance sales have seen a more than 20% increase year-to-date, with insured trips costing about 18% more than the previous year, suggesting that travelers are investing in more expensive trips and seeking to protect those investments.

The practicalities of travel also play a role in the growing demand for insurance. Airlines mishandled over 22 million bags in 2017, and most U.S. health insurance policies do not cover international travel, highlighting the need for separate travel insurance to cover medical expenses and potential medical evacuation costs. The travel insurance sector experienced a 30% increase in the total value of claims paid out to policyholders in 2023, with payouts averaging $1,900 per claim. Trip cancellation claims accounted for 25% of all claims, with an average payout of around $5,000, while emergency medical claims represented 24% of the total, with an average payout of $1,456.24. The highest payout for “Cancel For Any Reason” (CFAR) claims reached over $25,000, illustrating the substantial financial risks that comprehensive travel insurance can help travelers avoid.

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The Surging Demand for Travel Insurance with Medical Coverage in the U.S. Control Over  52.60% Market Share

The demand for travel insurance market with medical coverage is skyrocketing across the United States, as savvy Americans recognize the critical importance of safeguarding their health and finances during their adventures abroad. At the forefront is the need for protection against the staggering costs of medical treatment overseas, where emergency medical and evacuation coverage can save travelers from financial ruin in the face of unexpected health crises. Travel medical insurance is a non-negotiable necessity for those with pre-existing conditions or those embarking on thrilling adventure activities, as it provides a vital safety net against the costs of unforeseen injuries or illnesses that can strike at any moment during a trip. Industry experts universally recommend a policy with a minimum of $50,000 in emergency medical coverage and $100,000 in medical evacuation coverage for international journeys.

Another driving force behind the surging demand for travel medical insurance in the US travel insurance market is the glaring limitations of domestic health insurance policies, such as Medicare and Medicaid, which leave travelers exposed to the full brunt of medical costs outside the U.S. Even private health care plans often fall short in providing adequate coverage across different countries, making supplemental travel insurance an absolute must. Without this crucial protection, Americans could find themselves saddled with crippling out-of-pocket medical expenses that can quickly turn a dream vacation into a financial nightmare. Travel medical insurance is ingeniously designed to bridge these gaps, empowering travelers to prioritize their immediate medical needs without the looming specter of financial stress. It offers a comprehensive safety net that encompasses everything from broken bones and heart attacks to emergency dental procedures, and can even facilitate seamless communication with medical personnel in foreign countries.

Some destinations in the travel Insurance market have recognized the paramount importance of travel medical insurance, going so far as to require proof of coverage as a condition of entry. With policies typically ranging from a mere $40 to $80, travel medical insurance represents an incredibly affordable way for Americans to shield themselves from the financial devastation of unexpected medical expenses while exploring the world. As the perils of global travel become increasingly apparent, and with the growing recognition of the shortcomings of domestic health insurance policies, the demand for all-encompassing travel insurance that includes robust medical coverage is poised to continue its relentless upward trajectory. Don’t let unexpected health emergencies derail your travel plans or drain your bank account – invest in the peace of mind that comes with top-notch travel insurance with medical coverage.

US Travel Insurance Market Key Players

  • Allianz Global Assistance
  • American Express Company
  • American International Group, Inc.
  • Axa S.A
  • Berkshire Hathaway Specialty Insurance Company
  • Generali Global Assistance
  • HTH Travel Insurance
  • Nationwide Mutual Insurance Company
  • Seven Corners Inc.
  • Tin Leg
  • Travelex Insurance Services Inc.
  • Other Prominent Players

Key Segmentation:

By Type

  • Individual Insurance
    • Single Trip Insurance
    • Multi Trip Insurance
  • Group Insurance
    • Single Trip Insurance
    • Multi Trip Insurance

By Risk Coverage

  • Medical Cover
    • Emergency Accidental Treatment & Evacuation
    • Emergency Medical Treatment & Evacuation
    • Personal Accident
    • Accidental Death & Disability
    • Emergency Dental Treatment
  • Smooth Transit Covers
    • Trip Cancellations
    • Common Carrier Delay
    • Delay of Checked-In Baggage
  • Flexible Trip
    • Loss of Passport
    • Emergency Cash
    • Emergency Trip Extension
    • Trip Abandonment
    • Personal Liability & Bail Bond
  • Others

By Tripe Type

  • Medical Travel
  • Corporate Travel
  • Student Travel
  • Leisure Travel
  • Comprehensive Travel

By Destination

  • International
  • Domestic

By Distribution Channel

  • Banks
  • Insurance Aggregators
  • Insurance Brokers
  • Insurance Companies
  • Insurance Intermediaries

By End User

  • Students
  • Travelers
    • Travel Bloggers
    • Tourist Guides
    • Family Travelers
    • Business Travelers
    • Group Travelers
  • Senior Citizens
  • Others

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About Astute Analytica

Astute Analytica is a global analytics and advisory company which has built a solid reputation in a short period, thanks to the tangible outcomes we have delivered to our clients. We pride ourselves in generating unparalleled, in depth and uncannily accurate estimates and projections for our very demanding clients spread across different verticals. We have a long list of satisfied and repeat clients from a wide spectrum including technology, healthcare, chemicals, semiconductors, FMCG, and many more. These happy customers come to us from all across the Globe. They are able to make well calibrated decisions and leverage highly lucrative opportunities while surmounting the fierce challenges all because we analyze for them the complex business environment, segment wise existing and emerging possibilities, technology formations, growth estimates, and even the strategic choices available. In short, a complete package. All this is possible because we have a highly qualified, competent, and experienced team of professionals comprising of business analysts, economists, consultants, and technology experts. In our list of priorities, you-our patron-come at the top. You can be sure of best cost-effective, value-added package from us, should you decide to engage with us.

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