Outlook for Canadian Travel Insurance September 20, 2005
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Transcript of Outlook for Canadian Travel Insurance September 20, 2005
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Outlook for Canadian Travel InsuranceSeptember 20, 2005
David Redekop, Principal Research Associate, The Conference Board of [email protected]
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Presentation Outline
1. Travellers of the future2. Changes in where Canadians are traveling3. Travel forecasts & issues
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Summer Outbound Leisure Travel(’000 of outbound summer [April through Sept.] leisure trips each year)
6800
7000
7200
7400
7600
7800
8000
8200
8400
2000 2001 2002 2003 2004
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Visitors to Canada: Rebound but not as strong, still below 1996 level
4,377 4,2343,935
4,1874,366
4,0103,796
3,188
3,9174,117
4,335
1000
1500
2000
2500
3000
3500
4000
4500
5000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
( ‘000 of 1+ night overseas foreigner person-trips to Canada)
Source: Historical Statistics Canada; forecast CBoC.
SARS
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Canadian outbound travel on a strong rebound after 3 years of difficulty
15,934 16,057
14,34514,999
15,66315,006 15,103 15,229
16,827
18,089
18,922
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
( ‘000 of outbound leisure trips by Canadians)
Source: Historical Statistics Canada; forecast CBoC.
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Yet outbound leisure trips still not at 1991 level
18,922
19,516
1991 2006
( ‘000 of outbound leisure trips by Canadians)
Source: 1991 Statistics Canada; forecast CBoC.
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Economic, demographic and travel industry changes will continue support growth in
outbound leisure travel
However, which Canadians are traveling, where they are going and what they are
doing has changed significantly
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Travelers will be:
older, travel farther, stay longer
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Future travel insurance customers(Canadian population growth‘000 in 2001 and 2011)
7,900
2,917
3,935
8,291
2,264
4,596
5,319
4,663
3,382
4,846
2,097
4,353 4,500
5,301
19 and Under 20 TO 24 25 TO 34 35 TO 44 45 TO 54 55 TO 64 65 AND OVER
2001
2011
Source: Statistics Canada
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Future travel insurance customers(Overseas trips in 2004 and 2011 by age group)
587,566
1,010,938
1,169,265
872,967
722,100
1,008,500
405,900
182,700
556,500
975,600
712,500714,919
197,250
425,989
<19 20 TO 24 25 TO 34 35 TO 44 45 TO 54 55 TO 64 65 +
Trips in 2004Trips in 2011
Source: Statistics Canada
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Future travel insurance customers(% change in overseas trips between 2004 and 2011 by age group)
7%
21%
16%
5%
8%
6%
4%
0%
19 andUnder
20 TO 24 25 TO 34 35 TO 44 45 TO 54 55 TO 64 65 ANDOVER
Total
Source: Statistics Canada
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Less US, more Asia & Caribbean
7.7%6.6%
5.0% 4.9% 4.5%3.9%
1.6%
-3.4%-0.3%
Asia Caribbean OtherEurope
Africa CentralAmerica
Mexico Europe SouthAmerica
US
Average annual rate of growth in Canadian visits between 1990 and 2003.
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US losing share of Canadian outbound leisure trips
(% share of Canadian pleasure trips by year) 87%
13%
67%
33%
US pleasure trips Non-US pleasure trips
19912003
Source: Statistics Canada.
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Asia rebounded sharply 1 year following SARS(% change in # of Canadian visitors, 2004 vs 2003 and 2003 vs 2002)
-4.0% -4.2%
-29.5%
-20.9%
9.9% 12.7%
46.6%51.1%
Thailand Japan Hong Kong China
2003 vs 20022004 vs 2003
Source: Respective tourist boards/authorities
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Capacity to China up 58%(Number of planned direct seats, by carrier, from Canada to China)
• Planned direct seat capacity from Canada to China is up by 58% for summer 2005.
• All three carriers have boosted capacity with China East increasing seat capacity the most – some 243%.
• China Eastern Airlines began service from Vancouver to China in June 2004.
121,468
208,826
May to Oct. '03 May to Oct. '05
Source: OAG.
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Emerging Travel Destinations• Eastern Europe – borders opened up, $ flowing into
building tourism infrastructure,• Asia – appetite for travel to “exotic” destinations has
been growing for last 10 years.• Central America – Caribbean going up-market while
Central American countries eager to build tourism industry.
• Underperformers with lots of potential – Africa & Middle East
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Insurance risk nights more than double for travel to non-US destinations
8.2
16.9
US Non-US
(Average # of nights spent while traveling for leisure purposes, 2003)
Source: Statistics Canada.
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Insurance risk nights between US & non-US will be about equal in 2005
1998 1999 2000 2001 2002 2003 2004 2005
US NonUs
US Risk Nights
Non-US Risk Nights
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WHTI will impact travel to US
• Western Hemisphere Travel Initiative requiring passports to travel to the US will hit discretionary auto travel the most.
• More level playing field – US no longer has “passport not needed advantage”
• Renewed confidence in outbound travel favours less traditional destinations such as Asia, Central America, Eastern Europe
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20Total Loss in Trips & $(between 2005 and 2008 due to WHTI)
$785,000
2,569,000
Total trips lost Total $ '000 lost
Source: CBoC TRIP model
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Winter Vacation Intentions(% indicating Yes/Probably would take a winter vacation trip)
Canadian intentions to take a winter vacation fell somewhat in our June survey to 45% compared with 48% a year ago. A drop in the intentions to take a winter vacation in Canada was the main reason for the drop in the overall level of vacation intentions.
33%
42% 42%48%
45%
0%
10%
20%
30%
40%
50%
60%
June'01
June'02
June'03
June'04
June'05
Yes & Probably
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Steady increase in winter outbound trips planned
(# of Canadians intending to take an outbound winter vacation trip, June survey each year)
4,102,633
6,841,955
2001/02 2005/06
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More uncertainty about outbound destination
(% that did not know which destination in Canada, US or Other Int’l they would visit)
1.3% 2.0%
8.3%
1.8% 2.4%
18.6%
Canada US Other
2002 2005
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Air travel at normal level(% intending travel to US by car and air on winter trip, June each year)
42%
51%
35%
62%
Car Air
20022005
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Most outbound travelers have high-speed Internet connection
75%69%
77% 77%
Travellers with Internet connection Highspeed connection
20042005
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Travel insurance
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Premiums have grown: Average premiums for individual trip policies each year
$55.58$61.53 $59.32
$64.44 $68.20 $68.72
$81.82
$66.48
1996 1997 1998 1999 2000 2001 2002-03 2004 Premium =CPI
Growth
?
Source: CBoC travel insurance industry survey each year
Industry surveynot donein 2002 & 2003
+19%
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Travel insurance policy sales(‘000 of individual trip travel health insurance sales to Canadians)
3,737
2,858 2,835 2,9442,639 2,539 2,544
3,1873,420 3,550
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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29Travel insurance ½+$ billion market
($ millions in premiums)
$199.9
$117.2 $107.2
$260.7
$103.6
$139.8
Individual Annual Trip Cancellation*
20002004
Source: The Conference Board of Canada Travel Health Insurance Monitor.* Trip Cancellation figure does not include for domestic trips
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Ontario home to nearly 4 in 10 travel insurance buyers
(% of individual & annual premiums sold by province/region)
25%22%
10%
3%
37%
2.5%
Ontario BC Quebec Alberta Man./Sask Atlantic
Source: CBoC travel insurance industry survey, 2004
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Growth in snowbird trips(‘000 of Canadian Snowbirds 55+, trips of 30+ nights)
457 441 433489 478
526
610654
687
1998 1999 2000 2001 2002 2003 2004 2005 2006
7.2%
Source: Historical Statistics Canada; forecast CBoC.
5%
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Are we seeing the beginning of the end of provinces providing coverage of out-of-
country medical services??
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Romanow report: out-of-country coverage not an entitlement
Recommendation 5 of the "Romanow report" regarding the portability of medical services under the Canada Health Act states that out-of-country
coverage for insured health services "be considered a benefit if provinces choose to provide it but not entitlement under the Canada Health Act” and that “the portability provisions of the Act be limited to
supporting mobility within Canada.”
"Building on Values: The Future of Health Care in Canada" Commission on the Future of Health Care in Canada, November 2002.
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$ Millions in payments by Provinces for out-of-country medical services
$69$76
$84
2003 2004 2007
Source: Historical Canada Health Act Annual Reports with Quebec estimated. Forecast CBoC
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Ontario: Payments for out-of-country insured physician services
($ millions)
$7.0
$11.6
$15.5
$8.2
$10.2 $9.9
1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004
Source: Canada Health Act Annual Reports
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THIA responsibility?Perhaps THIA should consider making representation to the appropriate officials in response to the Romanow report that the Canadian travel insurance industry, having a long and respectable record in servicing the out-of-country medical insurance requirements of Canadians, is ready & willing to assume a greater role in protecting Canadian outbound travelers and at the same time, reduce the growing financial burden facing all provincial governments to adequately fund health services.
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Wrapping up
• Survived the worse 3 years in the history of the travel industry since WWII.
• Changes in who is traveling and where will mean risk nights to non-US destinations will exceed risk nights to the US in 2005 and beyond.
• Governments looking for ways to better manage funding the growth in health care costs as the Canadian population ages.
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Thank you!