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Age and travel insurance

Why travel insurers use age when pricing cover

Relatively few rating factors are used in setting the price for travel insurance. In general, these are restricted to the destination of travel, length of trip, the customer's age and medical history. This simple approach keeps prices low and allows a diverse range of distributors to operate in the market.

The use of age in the assessment of risk is therefore very important to travel insurers. This is because the main component of travel insurance claims is medical-related, and these are closely correlated to age.

Impact of age on travel insurance claims and premiums

Chart One shows the percentage of customers claiming per policy, the average cost of a claim and the average premium in 2014 for people aged 18-20, 21-25 and so on in five year bands until age 90. All policies for people aged 91 and over have been grouped together.

Chart One - Average claim, average premium and the claims frequency for travel insurance by age, 2014

Travel by age 2014

The ABI’s data for 2014 shows that:

  • People aged between 61 and 65 were more than twice as likely to make a claim compared to 26-30 year olds.
  • The average claim for people aged between 86 and 90 was around three times greater than for travellers aged 26-30.
  • The average claim for travellers aged 91 was more than ten times the average premium paid by that age group.

Average premiums were higher for older customers, reflecting both the higher claim frequency and higher average claim compared to younger customers. Those aged between 86-90 were more than four times more likely to make a claim than those aged 21-25, while the average claim made by those aged 86-90 was more than four times that of those aged 21-25.

If you are finding it difficult to find suitable cover, a specialist insurance broker will usually be able to help. The British Insurance Brokers’ Association (BIBA) can put you in touch with a specialist broker.