Will Travelers Buy More Insurance in 2017?

Higher trip costs coupled with increased global travel and more extensive flight delays and cancellations will generate a five percent increase in travel insurance purchases in 2017, said officials at travel insurance provider Berkshire Hathaway Travel Protection (BHTP).

BHTP’s second annual “State of Travel Insurance” benchmark report, issued Monday, says 36 percent of consumers expect to purchase more travel insurance in 2017 than in 2016. The same study reports 61 percent of travel agents surveyed by BHTP expect their travel insurance sales to increase in 2017 compared with 2016.

The “most influential” factors impacting travel insurance sales in 2017 are topped by an expected general increase on leisure travel in 2017. The BHTP study reports 41 percent travelers plan to take more international leisure trips in 2017; because “significantly more international leisure trips are covered by travel insurance” than domestic leisure trips (39 percent compared to 16 percent). For BHTP,  the result is “an expected increase in travel insurance sales.”

BHTP officials additionally cited “increase in trip costs” as leading to increased year-over-year travel insurance purchases in 2017. The study reports 45 percent of travelers say they will buy more travel insurance in 2017 due to higher leisure trip costs. BHTP officials expect a four percent increase in year-over-year trip costs in 2017 due to “currency fluctuations, increases in lodging costs, airfares, cruise costs and ground transportation.”

Ever-present flight delays and cancellations rank as the third-most influential factor in consumers’ intention to purchase more travel insurance, BHTP reports. The study found 71 percent of travelers bought more travel insurance in 2016 due to flight issues including cancellations and delays.

International terrorism also ranked among the 10 leading travel factors for 2017, providing travelers with additional incentive to purchase travel insurance. BHTP reports 60 percent of travel agencies and 25 percent of travelers said international terrorism was a threat to traveling. Another 12 percent of travelers stated that fear of terrorism is a reason to purchase more travel insurance.

BHTP’s State of Travel Insurance study compiles responses from 573 travelers and 96 travel agencies regarding traveler habits and agencies’ business, 2016 experiences and 2017 expectations. The report is drawn from data including travel trend reports from the Global Business Travel Association, Sojern, IATA, the Cruise Lines International Association, and cruisemarketwatch.com, with additional information from MMGY Global’s Portrait of American Travelers.

Data from these sources were used to “create detailed models of trip costs to various regions and projections including travel insurance rates as a percentage of trip cost,” said Dean Sivley, BHTP’s president. “Each year, we do a deep dive into travel industry trends and forecasts to analyze the correlations and their impact on travel insurance,” he added. BHTP’s projections were used to calculate total 2017 travel insurance sales; those were compared with 2016 figures to calculate the percentage of change.

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