Covid-19 has caused a crisis for the tourism industry. Last year, McKinsey reported that it made up 10 per cent of global GDP, sitting almost three times larger than the agriculture sector at nearly $9 trillion. But new data indicates that international tourist arrivals are projected to plunge by 60 to 80 per cent in 2020 and are not expected to jump back to pre-crisis levels next year. One thing is likely: increasingly cautious tourists and business travellers will be more inclined to purchase travel insurance when they go abroad. Naturally, this is music to the ears of travel insurance providers, but there is skepticism about whether the offerings currently available are innovative enough to meet the new demands of the next generation of travellers.
The cost of falling ill abroad Travel has long been the â€œproblem childâ€? of the insurance family - offering only a minor revenue stream with high loss and combined ratios, and a long road to breaking even on a customer. 40
And, in bad news for insurance providers, health costs around the world are rising. According to Willis Towers Watson in the US, the cost of medical care will rise 6.8 per cent globally this year. The most dramatic rises are in the Middle East and Africa, where costs are set to jump by 9.3 per cent, up from 8.5 per cent in 2019. There are several reasons why this is happening - including a greater demand for quality healthcare from more informed consumers, a higher incidence of chronic conditions, ageing and growing populations, the introduction of regional regulations, advancements in medical technology, and an increasing number of non-resident or no-income resident cases that do not pay any of the bills. As healthcare costs continue to rise year-on-year, out-of-pocket medical expenses become further out of reach for many travellers and expats. This in itself increases the demand for cover that will shift the burden from consumer to the insurance provider. This is because costs for hospital care can be steep and vary drastically by country - treating gastroenteritis in Thailand will set you back around $2,000, but medical attention for pneumonia in Beijing