The relationship between the fallout of COVID-19 on travel and the travel insurance industry has been direct and not difficult to understand in a general sense. That is, a lot less travel resulted in far fewer travel insurance policies sold through 2020.
On the other hand, the pandemic produced a boom in sales of travel insurance in other ways.
A closer look illuminates some interesting breakdowns about how travel insurance has changed, including key shifts in the demographics of travelers.
A Change in Demographics
Up until pandemic times, older America purchased the majority of travel insurance policies because they did the most traveling to overseas destinations. Until 2019, the year before COVID took hold, the average age of a traveler was 50. In 2020, the average age for a traveler abruptly changed to 38.
Thus, the most likely market for policies migrated swiftly from Baby Boomers to Generation X.
Caribbean Destinations Rise
Trips to the sunny beaches of the Caribbean island nations have always been popular, but travel statistics show that they were not the dominant choice. Trips to Europe were by far the highest, comprising 45% of all bookings. After the United States enacted travel bans to Europe, that naturally dropped to 10%.
The Caribbean islands were certainly not immune to COVID restriction, and some island nations found it necessary to ban incoming travel for periods. However, with Europe no longer an option, flights booked to Caribbean nations skyrocketed. For example, trips to Turks and Caicos jumped a robust 303%. Flights booked to the U.S. Virgin Islands soared by 207%.
Thus, travel insurance policies tailored to the risks associated with Caribbean travel instead of European travel saw huge increases, according to an analysis by Squaremouth, an insurance statistical data site.
More Demand for Special Coverage
Another way travel insurance changed was an increased interest to buy coverage for medical care, unforeseen disruptions, and trip interruption. Demand to be covered for these contingencies is a good way for travelers to hedge their bets against a trip that goes off track. For example, policies for “cancel-for-any-reason” ballooned by an amazing 500%.
Also, more people opted to buy travel insurance when they would not have before the pandemic. According to a spokesperson with Embark Beyond, 90% of the trips they booked carried travel insurance policies compared to just 58% before the pandemic.