THE days when annual travel policies were a rarity are disappearing fast.
Sales have been increasing for several years, but intermediaries say interest this year is phenomenal. This has been due to falling premiums, direct-sell adverts and the entrance into the market of consumer names such as Boots and Tesco.
While none of the intermediaries will reveal the size of the market, JS Insurance Management managing director Steve King said sales on his Frequent Traveller policy are up three-fold year on year.
ABC Holiday Extras managing director Stephen Lawrence added that the annual policy is now nearly as big as the single-trip market.
However, GE Capital Travel Insurance Services head of sales and marketing Lisa Garton estimated annuals make up only 18% of the market.
“Agents account for 70% of insurance sales and they still give away free single-trip insurance,” she said.
Annual schemes, also known as frequent policies, allow travellers to take any number of overseas trips in one year. But because the maximum number of days for any one trip is limited, they should not be confused with long-stay schemes.
Most annuals include winter sports cover. Normally, it is for up to 17 days in one year, as in Inter Assurance’s Select Multi-trip, but there is wide variation. For example, Perry Gamble policies cover 10 days, Citybond allows up to 31 days and JS Insurance Management covers unlimited winter sports.
Some offer business cover. This covers company documents and the cost of flying a replacement employee overseas.
Most business comes from independent travellers but families can benefit too. Two adults and any number of children under 18 or in full-time education, buying worldwide 12-month cover with Matthew Gerard, will pay £125 a year. Two equivalent single-trip premiums,at £66 each, cost more.
Because of their low cost – some individual net premiums are around £35 – these are not popular with agents. Even on a reasonably priced scheme, they earn less selling one frequent scheme a year than two single-trip policies.
Agents selling two 17-day JS Insurance Management policies to the US could earn £50 commission, but one annual will only bring in £30.
However, there are benefits for agents. Hamilton Barr writes to clients before a policy expires and if it is renewed the retailer will get the commission despite having done nothing.
Ketteridge general sales manager Doug Weston added: “There are many people who renew policies automatically, so agents can be sure of some level of repeat business.”
Journeys Travel Insurance managing director Patrick Chong said some of his agents give away the annual policy to encourage clients to buy all their travel from the agency. “We have reduced rates and Frequent Journeys is now one of our fastest-growing schemes,” added Chong.