Strong underlying demand offsets hikes in reinsurance costs
Melbourne, Australia (PRWEB) March 03, 2013
The path trodden by the Travel Insurance industry in the past five years has been full of ups and downs. Seesawing revenue in the past five years can largely be attributed to the volatility of the financial market, rather than the underlying demand for travel insurance products. IBISWorld estimates industry revenue to grow at an annualised rate of 3.6% in the five years through 2012-13. Industry revenue is expected to grow by 0.2% in 2012-13 to reach $743.8 million.
According to IBISWorld industry analyst Ricky Willianto, “the global financial crisis did not exhaust Australians' enthusiasm for travel”. The number of international travels taken by Australians almost doubled between 2007 and 2012. This is mainly attributed to a strong Australian dollar, which makes overseas travel relatively cheaper. This, together with the rise of low-cost airline operators, has fuelled the growth of gross premium income in the Travel Insurance industry over the past five years.
Despite a strong underlying growth in demand, the industry has faced increasing costs. A main element of the industry cost is reinsurance expense, which has hiked over the past five years. An unusually high incidence of natural disasters around the world in the past five years has resulted in a rise in the volume and value of insurance claims, forcing reinsurers to increase premiums.
Profit margins in the industry remained relatively healthy, although reinsurance costs have been increasing. Many operators are able to transfer cost increases to clients easily, allowing them to preserve profit margins. “An increase in the use of online channels to distribute and market products has also helped many operators to lower operational costs and reduce commission payments to traditional retailers such as airline operators and travel agencies”, says Willianto.
As the financial market recovers, industry revenue will enjoy a less volatile period of growth over the next five years. The Travel Insurance industry in Australia exhibits a medium level of market share concentration. The top four companies are Insurance Australia Group Limited, Allianz Australia Limited, QBE Insurance Group Limited and Suncorp Group Limited.
For more information, visit IBISWorld’s Travel Insurance report in Australia industry page.
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IBISWorld industry Report Key Topics
This industry underwrites (i.e. assumes, pools and spreads out risk of financial losses over policyholders in exchange for premiums) travel insurance policies. Coverage can include losses from trip cancellation and delay, lost baggage and medical emergencies.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.