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Though overseas travel by Indians is growing at a healthy pace, only one in five opts for travel insurance, reveals an ICICI Lombard report on insurance trends.
However, those travelling un-insured could be doing so at their own peril — for instance, hospitalisation for a day in the US could cost up to $10,000.
Says Sanjay Datta, Chief - Underwriting and Claims, ICICI Lombard GIC Ltd: “The number of Indians travelling overseas crossed the 12 million mark in May 2011 and is expected to touch 50 million by 2020.
“However, travel insurance as a category has been able to tap only a small portion of this segment, amounting to Rs 400 crore. But the sector holds lot of scope in the coming years.”
According to IRDA (Insurance Regulatory and Development Authority), there has been a 10 per cent year-on-year growth in the travel insurance segment.
With short duration overseas travel becoming a trend, insurance companies say that many do not opt for travel insurance.
“Especially for South-East Asian countries, which are becoming popular travel destinations, most travellers feel that they do not need travel insurance,” said Vikramjeet Singh, Head-Travel Insurance, Bajaj Allianz General Insurance.
High-value claims
Medical claims account for a major proportion of the travel-related claims.
“About 90 per cent of the total claims relate to medical cases,” says Amit Madhan, Chief Operating Officer – IT, E-Services and Insurance, Thomas Cook (India).
However, the frequency of claims in the travel insurance segment is only around 1-2 per cent. “But the quantum of the claims is usually big,” Singh added.
Tour operators say there has been a growing awareness about travel insurance.
“A strong demand has been noticed amongst NRI customers for taking travel insurance for their elderly parents or relatives. A significant number of customers are opting for annual multi-trip policies,” said Madhan .
Rupee depreciation
The 22 per cent fall in the value of the rupee vis-à-vis the US dollar, from 44.46 in January 2011 to 54.02 in March 2013, has resulted in travel insurance premiums going up.
The claims for outbound travel insurance are paid out by general insurance companies in foreign currency while the insurance companies collect premium in rupees.
The premium for travel insurance is dependent on the traveller’s age, duration of the stay and destination.
For instance, a 40-year-old on a 10-day trip to Europe would pay a premium of about Rs 700, while the same person would pay 30-40 per cent more for a trip to the US and Canada.
Given the changing scenario worldwide and the varying needs of travellers, insurance companies have introduced new products to cover risks such as political risk and catastrophe evacuation, compassionate visit, and emergency hotel stay extension.
> nivedita.ganguly@thehindu.co.in
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