More travelers, disruptive events fueled growth in insurance

Travel insurers again enjoyed a year of growth in 2017, largely thanks to more people traveling and increased awareness of insurance because of unpredictable, disruptive events like the destructive hurricanes that swept through the Caribbean.

And, as awareness continues to increase, early indications suggest that 2018 will prove to be another strong year for the travel insurance marketplace.

Insurers reported that sales from the agency channel, in particular, saw growth in the past 12 months that was at least on par with growth in 2016 and, in some cases, significantly higher.

"The overall trends are that people are becoming more aware of travel insurance, people are traveling more, so the travel insurance industry is growing," said Chris Carnicelli, CEO of Generali Global Assistance.

In 2017, Generali saw 17% growth overall, which was on par with growth in 2016, Carnicelli said. Much of that growth came from the vacation rental marketplace, a Generali specialty. The agency channel also saw "modest growth" of about 5% in 2017, also on par with its growth in 2016.

Allianz, too, saw growth last year. The agency channel, in particular, saw "significant growth" of more than 20%, according to Richard Aquino, vice president of sales.

"We've had the best growth in our agent channel in 2017 that we've had in many, many, many years," he said.

Aquino said the growth likely resulted from more travelers realizing the value of travel insurance. He also said it follows Allianz's investment in the agency channel through strong products, a nationwide sales team and new technology, such as its agent booking platform AgentMax.

Travel Insured International's sales through the agency channel were also consistently strong throughout 2017, with growth each quarter, said Isaac Cymrot, vice president of industry relations.

"Agency sales for suppliers were strong, as well, and when agency sales are strong, we are going to see very strong sales through agents," Cymrot said. "It's one of our largest channels, so we continue to grow every year through our agency partners."

Conversely, Berkshire Hathaway Travel Protection's annual State of Travel Insurance research found that while agency sales grew in 2017, agents are expecting a slowdown in growth going forward.

Carol Mueller, vice president of marketing at Berkshire Hathaway, said a 2016 survey of agents found that they expected to see an 11% increase in sales in 2017. In 2017, however, the agents surveyed (260 in total) predicted only a 5% increase in 2018.

The 2016 survey revealed "unfounded optimism" among agents, said communications manager Kit Kiefer, but, he added, that optimism has been tempered, based on the 2017 survey.

"They're just pulling it back a little bit attitudinally," he said.

Mueller said agents still predict growth in their travel insurance sales in 2018, albeit at a slower pace.

Growth in 2017 was largely attributed to world events, ranging from terrorism to natural disasters, that interrupted travel, factors that have historically caused bumps in consumer interest in travel insurance.

"It was another one of those 'lions and tigers and bears, oh my!' type of years," Mueller said.

Often, when a travel-disrupting event occurs, TravelInsurance.com, an insurance comparison and purchasing website, sees a spike in traffic of 20% to 25%, according to co-founder Stan Sandberg.

"There is definitely a clear correlation between external events and people coming to the market," he said.

Hurricanes offer a prime example. In 2015, there were 11 named storms, of which four were hurricanes, he said. That increased to 15 named storms in 2016, seven of them hurricanes, and 17 named storms in 2017, 10 of them hurricanes, of which six were considered major. Terrorist incidents both domestically and abroad have also been on the rise in recent years.

"I believe those two externalities, those two things that generally disrupt travel, are catalysts for people to seek out travel insurance," Sandberg said.

Insurers agreed that the trend of increasing sales, both overall and in the agency channel, would likely continue in the next 12 months.

Aquino predicted that Allianz's insurance sales will "experience double-digit growth" in 2018.

Travel Insured International, too, expects increases in the new year.

"Talking with our partners on what they're predicting on the travel side, we're not seeing anything that's going to indicate any significant change," Cymrot said. "A lot of that is driven off of consumer travel buying patterns. If anything changes on the consumer travel side, that's going to have an impact on our numbers, but we're not seeing anything right now to indicate that there is going to be a change in pattern."