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Travel Insurance: Untapping Billions in Revenue through Innovation and Safety
Since 1950, the number of international tourists has grown steadily from 25 million to 1.3 billion in 2023, reflecting a CAGR of 5.57% over this period. Although growth has slowed in the 21st century, the long-term trend remains positive.
In this article
Increasing Traveling Population
Since 1950, the number of international tourists has grown steadily from 25 million to 1.3 billion in 2023, reflecting a CAGR of 5.57% over this period. Although growth has slowed in the 21st century, the long-term trend remains positive. Key drivers include economic development, particularly in emerging markets—where rising incomes have expanded the middle class and increased disposable income for travel. Globalization and better connectivity have also played a role, with improved infrastructure and affordable flights opening new travel opportunities. Additionally, digital platforms have simplified travel planning, while evolving lifestyles and work patterns encourage more frequent trips, as people increasingly prioritize experiences and benefit from flexible work arrangements. Despite economic challenges and disruptions like COVID-19, tourism has proven resilient, with global travel rebounding rapidly, as shown by UNWTO’s recent figures predicting a nearcomplete recovery to pre-pandemic levels by 2024.
Quantity Demand Driver: Traveling Population Forecast
Using Ordinary Least Squares (OLS) regression to project the long-term trend based on historical data, we estimate that the traveling population will reach approximately 1.49 billion people by 2035. For accuracy, we excluded data from 2020 to 2023 as the COVID-19 pandemic caused extreme disruptions, creating outliers that do not reflect the long-term trajectory of global travel. As tourism rebounds and mobility increases, this growth is expected to significantly drive demand for travel insurance plans worldwide, as more travelers seek coverage for unexpected events. The rise in travel accessibility, paired with growing disposable incomes and evolving travel behaviors, will further fuel the adoption of insurance products across leisure and business segments.
By the end of 2023, global tourism is expected to recover to 88-90% of pre-pandemic levels, driven by pent-up demand, increased air connectivity, and the gradual reopening of Asian markets. Some regions have already outpaced their 2019 performance—the Middle East saw P 3 arrivals 20% higher than pre-pandemic levels, while Europe and Africa reached 94% and 92%, respectively. The Americas also rebounded strongly, driven by high demand for Caribbean destinations.
Price Driver: Average Insurance cost of a $5,000 Trip
According to Forbes Advisor, the average cost of a $5,000 travel insurance policy across leading insurers is $200.26. This figure serves as the P variable in our TAM model. For future projections, we apply a 1.94% annual growth factor, which aligns with the average year-overyear growth of non-life insurance premiums over the past four years, as reported by Swiss Re. This consistent premium growth reflects broader market trends, including rising costs in claims management and increased demand for insurance products driven by greater travel volumes and shifting consumer behavior.
Our resulting Market Size forecast expects the travel insurance market to be valued at ~$155.31 billion by 2034, growing at a CAGR of 6.39%. The estimation contemplates the travel insurance penetration rate in 2023 of 30% and assumes an annual growth rate of 1% of it, expecting that penetration rate will reach 42% by 2034.
TAM Formula: TAM = (NTt)*(Pt)*(Apt)
NTt: Number of Travelers in each year t
Pt: Penetration Rate in each year t
Apt: Average Premium in each year t
Data Triangulation
Based on a consensus of multiple sources, including our proprietary estimations, Fact.MR, Allied Market Research, The Brainy Insights, and Precedence Research, the global travel insurance market is projected to grow significantly over the next decade.
In 2024, the market is expected to reach $42.28 billion, with forecasts indicating expansion to $123.21 billion by 2034. This translates into a CAGR of 11.29%, driven by increasing global travel volumes, rising awareness of travel risks, and the growing accessibility of insurance products through digital platforms. This strong growth outlook reflects both industry recovery post-COVID-19 and structural shifts, such as more frequent leisure travel and heightened consumer demand for risk management solutions.
To capitalize on the projected growth of the travel insurance market, insurance companies must act swiftly to position themselves strategically. With rising global travel volumes, companies need to expand distribution channels by leveraging digital platforms and partnerships with travel agencies, airlines, and fintech providers.
Consumer expectations are shifting towards customized, on-demand coverage, and insurers must embrace AI-powered underwriting and dynamic pricing models to meet these demands efficiently. Additionally, as more travelers prioritize risk management solutions post-pandemic, companies should enhance their claims handling capabilities, integrating real-time assistance and automation to improve customer experience.
The firms that move quickly to innovate products and improve accessibility, especially by addressing emerging segments such as adventure travel and remote work tourism—will be best positioned to capture this growing value. Delaying action risks missing out on substantial market share, as both traditional players and Insurtech disruptors compete to dominate this high-growth sector.
According to Precedence Research, in 2023 Europe held the largest share of the global travel insurance market, accounting for 38%, driven by well-established travel infrastructure, strong regulatory frameworks, and high awareness of travel insurance benefits. North America followed closely with 30%, supported by a growing demand for comprehensive travel protection plans. The Asia-Pacific (APAC) region, holding 23% of the market, is projected to experience the fastest growth between 2024 and 2034. This growth is fueled by increasing disposable incomes, rising travel activity, and advancements in travel medical insurance policies. Latin America, contributing 9%, is also witnessing steady growth due to heightened awareness and expanding travel opportunities across the region.
Untapping Billions: Underpenetrated Market
Current estimations are calculated with the 2023 penetration rate of 30% and its yearly, 1% growth factor. As penetration rate is still very low, we estimated the total possible market value for travel insurance, representing 6.2x the market size in 2024, 4.1x the market size in 2030 and 3x the market size in 2034.
The underpenetrated market value represents ~$218.96 billion in 2024 and it is expected to mean a total unlocked value of ~$243.64 billion by 2034, if penetration rates will only grow 1% per year. This means that Private Equity sponsors have a huge challenge in unlocking this value, by helping Insurance companies and Insurtech solutions with smart go to market strategies and growth capital, to keep travel insurance adoption higher.
Conclusion
The travel insurance market is poised for rapid growth, driven by increasing global travel volumes and a rising demand for risk management solutions. With the travel population projected to reach .49 billion by 2 3 , the market’s value is expected to grow from $42.28 billion in 2 24 to $ 23.2 billion in 2 34, achieving a CAGR of .29%. However, the most significant opportunity lies in addressing the low penetration rate, currently around 3 %. If penetration reaches %, the market could unlock up to 6.2x the estimated 2024 value, demonstrating immense untapped potential.
For Private Equities, this presents both a challenge and an opportunity. Insurance companies and Insurtech solutions must act swiftly to capture market share by expanding digital distribution channels, developing customized and on-demand coverage, and improving claims automation. With evolving travel behaviors and rising disposable incomes, innovative product offerings targeting new segments—such as remote work tourism and adventure travel—will be critical to driving adoption. Private Equity sponsors have a great opportunity to support 2 stages of value creation within Insurance portfolio companies: growth capital for technology infrastructure development needed to support a growing demand; and helping with Go to Market expertise to help Insurtech’s and Insurers to drive penetration rates higher. Those who move strategically will be best positioned to capture the unlocked value in this high-growth market.