The travel industry in the UK has been one of the worst hit by the outbreak of the COVID-19 virus, driving travel insurance policies down. The outlook for 2021 looks grim so far as travel restrictions remain in place.
Foreign travel restrictions have been in place since the start of the pandemic. A year on after the virus was first discovered in Wuhan, the UK has now temporarily suspended all travel corridors. The virus is compromising sales of travel policies. Findings from GlobalData’s 2019 and 2020 UK Insurance Consumer Surveys indicate that the proportion of consumers purchasing a travel insurance policy over the past 12 months fell from 58.7% in 2019 to 42.9% in 2020. With travel corridors suspended, anyone arriving into the UK is required to have proof of a negative COVID-19 test and self-isolate upon their arrival for up to 10 days, meaning many will be reluctant to travel.
With no signs of the spread of COVID-19 slowing down and new variants emerging in several countries that threaten to be more transmissible, travel restrictions – albeit with some easing – will likely be in place for a while. Many British holidaymakers who had planned to catch the winter sun away or go on a city break early this year will postpone or cancel their travel plans. Not everyone is able to self-isolate for 10 days, whether that is because of holiday allowance constraints, financial reasons if they cannot take that much time off work, or unwillingness. Plus, the requirement of taking a COVID-19 pre-departure test increases the expenses associated with travel.
Coronavirus is set to continue disrupting international movements and eroding people’s appetite for travel due to their fears of catching the virus or mere reluctance to face travel uncertainty. Sales of travel insurance policies will remain slim for the foreseeable future as airline passenger traffic remains comparatively low and scheduled flight cancellations continue. It will be hard for the aviation industry to increase passenger numbers substantially, as restoring consumer confidence will take time. As such, travel insurers are unlikely to rebound from the crisis any time soon.