Market Scenario 

The US Travel Insurance Market was valued at US$ 4.79 billion in 2023 and is projected to attain a market valuation of US$ 21.15 billion by 2032 at a CAGR of 18.14% during the forecast period 2024–2032.

The American travel landscape is in flux. While anxieties about travel disruptions are high (nearly half of Americans report increased worries), travel itself remains resilient with an average of 2.4 trips per person. This cautious optimism is reflected in the booming travel insurance market, where spending has surpassed $1.3 billion. The number of insured travelers has also surged by 15%, demonstrating a growing desire for financial protection. Interestingly, safety concerns now rank higher than health issues when choosing international destinations. This rise in travel insurance demand is driven by several factors. People with higher income and education levels are three times more likely to seek coverage. Additionally, the majority of insured travelers (56%) spend $1,000 or less per trip, suggesting that affordability is a key consideration.  For these travelers, fear of flight delays and reservation changes is the primary motivator (35%), highlighting the need for security against logistical hiccups.

Despite the growth, a significant portion (62%) of travelers remain uninsured. However, there's openness to future coverage, with 68% expressing interest. Travel providers are the preferred channel for purchasing insurance (55%), while credit card travel insurance offers a convenient alternative for a third of travelers. Interestingly, 18% of policyholders have already filed claims, showcasing the practical value of travel insurance.

Looking ahead, the US travel insurance market continues to expand. In 2023, Americans spent nearly $4.79 billion on travel protection, with online channels leading the way in sales. Trip cancellation/interruption remains the most popular coverage type, accounting for 89% of plans sold. Medical evacuation insurance (6.3% of plans) and "Cancel for Any Reason" (CFAR) add-ons cater to specific needs, although CFAR can significantly increase the cost. 

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Market Dynamics 

Driver: Increasing Awareness of Medical Costs Abroad

Travel insurance companies are emphasizing the high costs of medical care in foreign countries to drive sales. Many Americans are unaware of how expensive medical treatment can be outside the US without adequate insurance coverage. Every week around 3,000 Brits need emergency medical treatment when visiting other countries. In the US, needing an ambulance could incur charges of around $1,300 and a single overnight hospital stay can cost $10,000. Most US-based health insurance, including Medicare, does not provide coverage when traveling internationally. If you have a pre-existing medical condition like diabetes, cancer, heart problems or asthma, you must declare it to your insurer or it could be excluded from your policy. 

Adventure sports and activities like skydiving are often excluded from standard travel insurance and require special policies in the US travel Insurance market. Getting injured abroad without insurance can lead to extensive costs for medical expenses and repatriation. Healthcare costs are higher than most people expect when traveling - insurance is essential to avoid massive bills. 20% of travelers experience an illness or injury while abroad, according to the US Travel Insurance Association. The average cost of a travel medical insurance claim is $1,368, based on data from Allianz Global Assistance. International SOS estimates a medical evacuation from Europe costs $50,000-$100,000 on average. 

Trend: Demand for Comprehensive Trip Protection

There is growing demand among US travelers for travel insurance market that provides broad, comprehensive protection against a range of potential trip disruptions and financial losses. Consumers want robust coverage and benefits. Cheaper travel insurance plans may have lower levels of protection and higher claim deductibles, so it's important to prioritize coverage over just price. Travelers are looking for insurance that covers cancellations due to unforeseen circumstances like family member illness/death. Demand is rising for travel insurance that covers lost, damaged, delayed or stolen baggage and personal belongings. The most popular travel insurance products are extremely cost-effective while still being comprehensive. 

Consumers are looking for a travel policy that protects them from a variety of unexpected situations that could impact their plans, investment and health. Travelers want insurance benefits without exclusions for things like extreme sports, cruises, golfing and gadgets. Policies that include coverage for travel delays, trip interruption, and missed connections are increasingly popular. "Cancel For Any Reason" coverage, while more expensive, is being selected more often by travelers who want maximum flexibility to change plans. More consumers are opting for travel insurance plans with high emergency medical limits of $500,000 or more and emergency evacuation benefits. Demand for optional rental car collision coverage on travel insurance policies is growing steadily year-over-year. 

Challenge: Confusing Policies and Coverage Exclusions

A major challenge for travel insurers is that many consumers find the different policies and coverage options confusing. Exclusions in the fine print led to dissatisfaction and distrust. Not all travel insurance policies in the US travel insurance market cover all scenarios - it's critical to read the Product Disclosure Statement (PDS) carefully before purchasing. Pre-existing medical conditions are a common exclusion that can invalidate coverage if not declared. Many standard policies exclude specific activities like extreme sports or competition in organized events. Certain destinations may be excluded from coverage during times of unrest, war, or natural disaster.

Consumers are often unaware that most policies have maximum benefit amounts that cap reimbursement for things like trip cancellation, delays, lost luggage, etc. Deductibles and out-of-pocket claim costs vary widely between policies and can be confusing to compare. Coverage for cancellations due to "fear of travel", mental health conditions, or pre-paid event tickets is often unclear. Some policies won't cover trip cancellation or interruption due to a travel supplier's financial default or bankruptcy. Exclusions for alcohol or drug-related incidents are common but not always well understood by consumers. Claim filing and reimbursement processes are often complicated, time-consuming and require extensive documentation.

Segmental Analysis 

By Type 

Based on type, the individual segment is leading the US travel insurance market with over 77.49% market share and is also projected to keep growing at the highest CAGR of 18.32% in the years to come.  The demand for individual travel insurance in the United States is booming, outpacing demand for group travel insurance. This trend is driven by several factors, including a surge in solo travel (40% of global Baby Boomers took a solo trip in the past year) and business travel spending reaching $347.5 billion in 2022.

Individualized coverage is a key driver. Travelers prioritize customizable policies (70% opt for "Cancel For Any Reason" coverage) and business travelers often need specific coverage for each trip. The rise of online booking platforms (82% of travel bookings in 2018 were online) with the option to add individual travel insurance at checkout makes it convenient to purchase. Increased consumer awareness of travel disruption risks and the growing senior travel segment (Medicare may not provide coverage abroad) also contribute to the travel Insurance market.

Adventure travel's 65% annual growth fuels demand for individual policies that cover specific activities excluded from group plans. Frequent flyer programs offering individual travel insurance options, like Delta's trip protection and flight insurance add-ons, add to the trend. Finally, regulations like the European Union's Package Travel Directive, which requires insurance for travel packages, may influence U.S. providers to offer similar individual protections.

By Risk Coverage 

By risk coverage, the travel insurance with medical coverage segment is projected to continue dominating the US travel insurance market with over 52.60% market share and is also expected to keep growing at the highest CAGR of 18.51%. 

The demand for travel insurance with medical coverage is on the rise in the United States, as Americans increasingly recognize the importance of financial protection against unexpected medical emergencies during their travels. This trend is driven by several key factors, including the limitations of Medicare and Medicaid in covering medical costs abroad, the potential for high out-of-pocket expenses without adequate insurance, and the need for immediate and specialized care in foreign countries. Travel medical insurance is particularly crucial for those with pre-existing conditions or those engaging in adventure activities, as it helps cover costs from unexpected injuries or illnesses during a trip. Experts recommend a policy with at least $50,000 in emergency medical coverage and $100,000 in medical evacuation coverage for international trips. Without such coverage, travelers could face significant financial ramifications, as medical claims while traveling can be exceptionally high. 

Travel medical insurance is designed to fill in the gaps left by domestic health insurance policies, which may not provide coverage in different countries or out of network in the US travel Insurance market. It covers emergencies such as broken bones, heart attacks, and emergency dental procedures, and can facilitate communication with medical personnel in foreign countries. Some countries even require proof of travel medical insurance for entry. With policies averaging between $40 and $80, travel medical insurance is an affordable way for Americans to protect themselves against unexpected medical expenses while traveling. As the risks associated with global travel become more apparent, the demand for comprehensive travel insurance that includes medical coverage is expected to continue growing.

By Trip Type 

Based on trip type, comprehensive travel segment is leading the US travel insurance market with over 30.51% market share and is anticipated to keep its growth momentum and dominance undisturbed at a CAGR of 18.68% in the years to come. 

The landscape of travel insurance in the United States travel Insurance market is experiencing a significant shift, with comprehensive coverage becoming increasingly sought after by travelers. A AAA Travel survey revealed that 31% of U.S. travelers are now more inclined to purchase travel insurance, primarily due to the pandemic, leading to a double-digit year-over-year increase in sales. The desire for trip cancellation options and refunds is paramount, with 69% of travelers citing it as the most crucial benefit of travel insurance. This demand has prompted providers to offer plans covering COVID-19-related losses, addressing the historical exclusion of pandemics.

The trend towards comprehensive coverage is further supported by the fact that 60% of Americans prefer working with travel agents, who often recommend travel insurance as part of trip planning. Nearly 4 in 10 Americans are likely to purchase travel insurance for international trips, with 88% prioritizing trip cancellation refunds. AAA has reported a more than 20% increase in travel insurance sales, with insured trips being 18% more expensive than in the previous year, indicating a higher perceived value of insured trips.

The necessity of travel insurance is underscored by practical concerns: over 22 million bags were mishandled by airlines in 2017, and most U.S. health insurance policies do not cover international travel, necessitating separate coverage for medical expenses and potential medical evacuation. Additionally, the travel insurance sector saw a 30% increase in claims payouts in 2023, with an average payout of $1,900 per claim. Trip cancellation and emergency medical claims constituted a significant portion of these payouts, with "Cancel For Any Reason" claims reaching over $25,000, highlighting the financial risks that comprehensive travel insurance can mitigate.

By Destination 

On the basis on destination the US travel insurance market is led by the international segment with over 67.74% market share. The segment is also projected to continue dominating the market by growing at the highest CAGR of over 18.50% during the forecast period. 

Americans are investing heavily in travel insurance, with annual spending nearing $4.79 billion in 2023. This heightened concern for travel safety is reflected in the fact that nearly half of Americans are more worried about traveling, yet most maintain that events won't affect their travel plans. With one in six Americans experiencing travel disruptions due to illness or natural disasters, the need for insurance becomes clear. The average American takes 2.4 trips annually, with a growing number venturing internationally. Over 148 million individuals are now covered by travel insurance, marking a nearly 15% increase in sales. 

Despite this, many are still unprepared for travel catastrophes, though sales continue to rise steadily. Safety and security concerns are paramount when choosing an international destination, often ranking above health issues. However, these concerns are unlikely to deter overseas travelers, with spending on travel insurance on the rise. More than $1.3 billion is spent on travel insurance, with demand tripling among those with higher income and education levels.

A staggering 90% of all insured travel in 2022 was for international trips in the US travel Insurance market, with a 'high demand' anticipated to continue into 2023. Popular destinations include Mexico, Italy, Israel, The Bahamas, and France, with an average insured trip cost of around $6,500. Financial protections like trip cancellation coverage are crucial for prepaid and non-refundable expenses. Medical coverage is urged as domestic health insurance may not cover care in another country. Emergency medical and evacuation coverage are essential for receiving care without incurring massive bills.

Comprehensive insurance not only covers delays and lost items but also includes 24-hour assistance for emergencies. The cost of travel insurance is about 5% to 10% of the total trip cost, and it's easily accessible through online tools. With a 7-point increase in Americans planning international trips and Europe, Canada, Mexico, and the Caribbean topping destination lists, comprehensive coverage is recommended.

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Top Players in US Travel Insurance Market 

• 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

Market Segmentation Overview:

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