Mumbai, Dec. 18
TRAVEL insurance is growing in terms of volume though insurance companies say their profits are under pressure due to severe competition.
Leading insurers say the business has been growing at an average rate of 25 per cent per annum, though they do not have any actual figures to back it up.
Mr Sudhir Menon, National Sales Manager of ICICI Lombard, attributed the 25-per cent growth mainly to the increasing number of people travelling abroad and the fact that they realise the need for travel insurance, especially in the light of natural disasters such as tsunami and floods.
In fact, ICICI Lombard has witnessed a growth of 70 per cent in travel insurance in the half-year period over the same period last fiscal.
However, the premium has dropped significantly in some sectors. For instance, the travel cover that used to cost Rs 700 for a six-day trip to Europe a few years ago, now costs only Rs 400. The premium for the US, Europe and South-East Asia, excluding Japan, now has different rates.
But travel insurance to the US now attracts higher premium than countries in Asia as compared to a few years ago when there was a flat rate for a fixed time period.
Unlike the other portfolios, travel insurance is clubbed under accident and health insurance and is not disclosed separately to the Insurance Regulatory and Development Authority.
Though business figures of individual companies are difficult to come by, the travel insurance market premium is estimated at around Rs 200 crore annually.
With business travellers constituting the bulk of the annual seven million outbound travellers from the country, insurance companies are increasingly looking at corporate travel insurance. "Corporate travel insurance is a phenomenon that has occurred post-privatisation of the industry. We have clients such as Infosys, Wipro, Oracle and i-Flex for whom we develop customised travel insurance," said Mr Khalid Sohail, Head, Travel insurance services, Tata AIG general insurance.
The ratio of Tata AIG's retail and corporate portfolio currently stands at 70:30.
Bajaj Allianz General's corporate travel insurance portfolio is also growing. Mr Kamesh Goyal, CEO, Bajaj Allianz general insurance, said, "Almost all leading corporates have made it mandatory to insure their personnel when they travel abroad on work.
Bajaj Allianz has specialised and customised travel insurance plans with several corporates such as IBM, PwC, Veritas, Honeywell and HCL Technologies." The growth for Bajaj Allianz in the travel segment has been 35 per cent in the first half of the current financial year.
Companies say that demand for travel insurance has been growing with a lot of corporates using foreign travel as an incentive for their employees, distribution channels and vendors.
Multinational companies invite their local partners for training, international events or seminars.
"We have received requests to include maternity cover as part of our packaged policy by a leading IT firm, particularly because most of the employees being sent abroad are young couples. A war is being fought by the human resource departments of software companies and insurance is yet another tool in terms of offering more benefits to their employees," said an official with an insurance company.
However, competition has meant lower premia and profits.
Mr Goyal said, "Competition is leading to reduction in premium rates. The claims experience for the North American-bound segment is quite high. Thus profitability is under pressure."Related Stories:
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