Canada’s travel insurance market is recovering from losses linked to the COVID-19 pandemic but continues to face several challenges, according to a report from the International Travel & Health Insurance Journal.
Declining numbers of international students, high household costs affecting travel budgets, reduced vacation travel by snowbirds, concerns about storm impacts in Florida, and speculation about US border policies under a potential Trump administration all contribute to uncertainty in the sector.
The Conference Board of Canada reported that consumer confidence in travel remains stable but US-bound travel in the first half of 2024 declined by 2.7% from a year-ago period. Air travel dropped by 11.3%. Florida tourism data also indicated a year-over-year decline in Canadian visitors over four consecutive quarters, falling from a pre-pandemic high of four million visits in 2019.
This decline affects travel insurers, especially as survey data suggests that some Canadians are forgoing travel insurance due to cost concerns.
A September 2024 consumer survey by Maru Public Opinion, for TD Travel Insurance, found that while 68% of Canadians planned leisure travel within the next year, a third did not intend to purchase travel insurance.
The survey found that only 32% planned to buy both emergency medical and trip cancellation coverage, while more than 60% of the respondents indicated they would cut discretionary spending, such as dining out and clothing purchases, to fund their trips.
For snowbirds, it is slightly different. Snowbirds typically understand that provincial health plans provide limited out-of-country coverage, covering only a small percentage of US medical costs.
Canadian travel insurers have developed detailed underwriting processes to assess risk and determine premiums for snowbirds. These applications require disclosure of medical conditions, which can impact pricing.
The term “snowbird” applies specifically to Canadians who own or rent properties in warmer locations such as Florida, Arizona, California and Texas for several months each year.
J Ross Quigley, CEO of Medipac, said that despite currency exchange fluctuations, many snowbirds have continued their winter travel habits. However, following two major hurricanes in Florida, he noted that some snowbirds are reconsidering their commitments, and potential new snowbirds may also hesitate before purchasing property.
“There are a lot of snowbirds saying they are going down to sell their place, if they can,” said Quigley, adding that sales have fallen in the wake of storms Helene and Milton, but up until then it was “business as usual.”
Meanwhile, artificial intelligence is being integrated into travel insurance claims processing in Canada, though adoption remains in its early stages. Ferial Ladak, director of global medical affairs for Global Excel, suggested that AI could play a role before travel or at the claim submission stage rather than during medical treatment.
Magdi Riad, president and CEO of Trident Global Assistance, noted that while AI can assist with data analysis and risk assessment, it also poses cybersecurity risks. “We do not expect to expose our data or plan to have AI ever click the decision button,” he said.
As travel patterns evolve, insurers will continue adjusting their strategies to meet changing consumer behavior and economic conditions.
