Mandatory health cover boosts travel insurance market
More countries are introducing compulsory travel insurance to mitigate the risk of health related expenses
Babu Das Augustine, Banking Editor, Gulf News
Dubai: The $100-120 million (Dh367-734 million) Middle East travel insurance market largely follows the global growth trend, primarily fuelled by the increasing insistence of governments across the world on mandatory health care, an industry expert told Gulf News.
“According to our internal assessment, we expect a growth spike in global and regional travel insurance market, primarily fuelled by rising health care costs, which is a major concern for governments across the world. An uninsured visitor or tourist can be a major liability for state health care systems, which is the reason why more countries are making travel insurance mandatory,” said Mahesh Anchan, Chief Operating Officer of the global travel services company, Vasco Worldwide.
He said major countries apart from Schengen countries have introduced mandatory insurance for example Turkey, South Africa, Russia and Kingdom of Saudi Arabia. More and more countries are adopting this approach to mitigate the risk of health related expenses.
The regional growth will also be catalysed by increased awareness among travellers that the complementary insurance cover which comes from third parties like financial institutions as a freebie does not cover many critical situations, and in many instances is inadequate and cosmetic.
“Some travel companies may also issue travel insurance just for using it as documentation for visa application which may not be as effective as full travel insurance policies valid for all sort of travel related contingencies, including health and even repatriation of mortal remains in case of unfortunate mishaps,” Mr Mahesh said.
“Travel insurance offered by credit card companies and medical insurance companies are basic insurance which covers a minimum requirement of insurance for people to travel to Schengen countries. Customers need to look at travel insurance in a more wholesome manner so that it is useful across all aspects of travel, be it issues related to booking of hotels, airlines and other services,” said Anchan.
To address this lack of awareness among customers when it comes to choosing insurance product, Vasco Worldwide has been running awareness advisories periodically across the 30 markets where the company is present.For Vasco Worldwide, travel insurance has been growing by over 40 per cent year on year and Middle East is a key driver of this performance. With increasing growth prospects, Vasco Worldwide intends to enter 10 more new markets globally, including untapped countries in the Middle East.
“Our two major markets in the region continue to be the UAE and KSA. We are also looking at rolling out in more markets in the GCC and Kuwait, Oman and Bahrain are on the radar, he said.It is estimated that the UAE travel insurance market is over $25 million. The regional market for travel insurance is driven by over 3 million travellers, and mostly this is catered by insurance companies, travel agents and airline companies.Innovation in the regional travel insurance segment focusing on customised solutions that comes with significant value adds which provide additional safety at nominal cost is also helping the industry grow. For instance insurance can cover travel inconveniences such as flight delays and baggage loss — these are definitive opportunities linked to travel across any destination.