Australian travel insurers report that travellers are reshaping how they plan and protect holidays heading into 2026, with cost pressures, regional destinations, and risk awareness all influencing behaviour.
1Cover Travel Insurance’s 2025 Travel Wrap Up indicates that while Australians are still travelling in significant numbers, they are adjusting their trip choices rather than cancelling them. Cost of living is now the main driver of travel decisions for 61% of Australians, with many opting for closer, perceived better-value destinations and revisiting when they take out cover within the booking cycle. Domestic trips remain strong, and nearby markets across Asia and the Pacific are recording higher volumes than some longer-haul itineraries to Europe. Japan is a prominent outbound market, with increased interest also reported in the US and China.
According to 1Cover, risk planning is being factored into bookings earlier than in previous years. Domestic travel policies are stable, and close to half of travellers are arranging insurance at least a week before departure, indicating increased awareness of pre-trip risks such as cancellations and medical events. “As 2025 wraps up, one thing is clear: Australians haven’t ditched travel; they’re just doing it smarter. They’re planning with purpose, chasing value, and making every getaway count. From tech-savvy prep to choosing closer, better-value destinations, and prioritising insurance, travellers are heading into 2026 more prepared, more confident, and certainly more mindful,” said Natalie Ball, COO of 1Cover Travel Insurance.
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The cruise segment continues to generate business for travel underwriters. 1Cover data shows cruise-related travel insurance policies rose 17% year-on-year, with Australians spending an average of 19 days on cruises. Cruise customers are also more likely to finalise their insurance well ahead of departure. Forty-four percent of cruise travellers purchased policies within 180 days before sailing, compared with shorter lead times that are more common for land-based holidays. Common cruise routes include domestic itineraries and nearby destinations such as New Caledonia and the South Pacific, with increasing volumes to the UK, Canada, Japan, and France.
1Cover’s report highlights growing use of artificial intelligence as part of trip preparation. Forty-one percent of surveyed travellers said they had used AI for research or planning, mainly for destination ideas, price comparisons, and building itineraries. However, the provider notes that trust in AI remains mixed. For many Australians, algorithmic tools are used to generate initial options, while final decisions still rely on human input from agents, airlines, and insurers, particularly when weighing coverage, exclusions, and potential claims scenarios.
While 1Cover is seeing earlier purchasing behaviour in some segments, RACV data points to an entrenched pattern of late travel insurance uptake among many Australians. RACV insights show that 35% of travellers buy travel insurance within seven days of departure, and 5% wait until the day they travel. There has also been a noticeable spike in policies issued within 48 hours of departure. RACV attributes this pattern to several factors:
For insurers, brokers, and advisers, the figures indicate continuing scope to explain the implications of purchase timing for cancellation, pre-existing conditions, and supplier default cover.
With Melbourne Airport expected to process more than 4.8 million passengers over the December–January peak, RACV is warning of an elevated likelihood of baggage disruption and associated claims. A recent RACV poll of more than 1,200 travellers found that 61% had experienced luggage that was delayed or damaged but ultimately returned, 26% reported luggage that was never recovered, and 13% said their baggage had been stolen and not returned.
Passport incidents are also rising. The Department of Foreign Affairs and Trade recorded 1,942 Australian passports reported stolen overseas and 2,678 reported lost in the 2023/24 financial year, a 28% increase on the previous year. Italy, the US, and the UK were among the key locations for lost or stolen Australian passports. RACV is advising travellers to keep passports in a secure location such as a hotel safe or locked suitcase and to store a separate copy of the passport photo page to assist with replacement processes and any related insurance claims. RACV added that travel insurance may respond when luggage is delayed, damaged, lost, or stolen, including potential coverage for reasonable repair or replacement costs and essential items purchased while bags are missing.
Beyond travel insurance, RACV is also drawing attention to motor and roadside risks during the summer period. In December and January 2024-25, RACV Emergency Roadside Assistance handled more than 37,000 call-outs in regional Victoria, above typical monthly volumes. RACV reports that common issues include flat batteries, tyre damage, lockouts, and mechanical problems associated with higher temperatures and longer distances.
RACV is encouraging motorists to confirm the status and scope of their roadside and motor insurance cover before travelling, including how caravans, trailers, additional vehicles, and drivers are treated, and whether memberships or payment details are up to date. For insurers, brokers, and underwriting agencies, the combined insights from 1Cover, RACV, and government data point to ongoing demand for travel and mobility, higher operational pressure around peak periods, and a continued need for education on policy timing, product features, documentation, and claims processes across both travel and motor portfolios.
