Changing traveler patterns, evolving customer needs drive demand for travel insurance

The travel insurance market in the United States is on a fast-track growth trajectory, fueled by new, innovative approaches to distribution, claims servicing and assistance designed to address changing traveler patterns and customer needs.

A research report by Astute Analytica characterizes the current market as “experiencing a robust period of growth,” with 148 million individuals purchasing $4 billion in travel insurance in 2024, a sales increase of close to 15%. U.S. travel insurance sales are expected to accelerate in coming years, according to a comprehensive market analysis by Grand View Research. The analysis forecasts compound annual growth of 14.4% from 2024 to 2030 to reach $8.49 billion by 2030.

The overall market growth is showing up on the bottom line for travel agencies. In Phocuswright’s U.S. Travel Agency Landscape 2024 research, 58% of respondents said their travel insurance sales increased year-over-year and more than one-third (35%) said travel insurance sales held steady over the same period.

The buyer

The expectations for continued growth reflect the potential in a largely untapped market for travel insurance in the U.S.

A recent Business Insider survey of nearly 1,000 U.S. travelers found that about 62% had not purchased travel insurance in the past 12 months. On the upside, close to 68% of travelers surveyed—including those who had and had not purchased travel insurance in the past year—said they would be willing to pay for travel insurance in the future to protect a week-long leisure trip.

At the same time, the demographics of those purchasing travel insurance are shifting. While seniors currently generate the largest revenue share in the U.S. travel insurance market, according to Grand View’s research findings, younger travelers are the fastest growing market segment. Allied Market Research identified travelers between 18 and 30 years old as the fastest growing demographic in the U.S. travel insurance market.

“Our research shows that younger people prioritize travel, spending more of their disposable income on travel than other age-groups,” said Suzanne Lustig, director of national accounts with Allianz Partners USA. “Because of that investment, many younger travelers are looking for ways to mitigate interruptions.”

Benefits to the industry

It is important to note that travelers are not the only beneficiaries of travel insurance protections. There are significant downstream benefits for travel sellers across the industry. For example, travel insurance supports travel advisors’ duty of care obligation, enhances loyalty as clients can travel with assurance that their trip is protected and generates an additional revenue stream.

At The Phocuswright Conference last November, Emily Hartman, general manager for Allianz Partners North America, noted that, “Our partners are trusting us, whether that’s selling through travel advisors or a travel agency or an offer in an airline booking path. We are an extension of our partners’ brands, so having a positive experience with us reflects positively with the partner. And it’s not just repeat purchasers for us down the line. We want to have repeat purchasers for our partners too.”

Factors leading to increased travel anxiety

Increased traveler anxiety due to a variety of potential disruptions and unpredictable circumstances likely contribute to the accelerated growth rate in the travel insurance industry. Environmental issues, including the growing impacts of climate change, are also introducing a heightened level of unpredictability into travelers’ plans.

In his take on 2025’s top seven global risks and their impact on the travel industry, Bruce McIndoe, president of McIndoe Risk Advisory, said “climate change on speed” will lead to more frequent and severe weather events worldwide.

“The frequency and severity of weather events will lead to increased flight cancellations, delays and rerouting,” McIndoe said.

That’s an unwelcome prediction for both leisure and business travelers. According to AirHelp, one in four passengers who departed from a U.S. airport in 2024 experienced a flight delay or cancellation. In TravelPerk’s most recent Business Travel Disruption Survey, nearly eight in 10 business travelers surveyed (78%) said they experienced travel disruptions in 2024, when there were 140,000 flight cancellations in the U.S. alone.

Amadeus market research found that U.S.-based leisure and business travelers most often cited dealing with delays and/or cancellations as a cause for concern, with 68% of respondents identifying those occurrences as distressing. Travelers surveyed expressed exasperation over their schedules being disrupted due to flight delays or cancellations that can cause a domino effect, leading to missed connections, rescheduled plans and a general sense of uncertainty.

“The world has become an increasingly unpredictable place, forcing even the best laid travel plans off the rails. In the past year, events like huge storms, dangerous wildfires and other unforeseen events have impacted travel,” Lustig said.

“Because of this, many consumers are considering travel insurance as a way to protect their travel investment when a covered situation causes a cancellation, interruption or significant delay.”

Insurance providers respond to changing needs

Traveler trends are also shaping the travel insurance market as well as the products and services they offer. One key area is the increased emphasis on personalization and what Phocuswright senior research analyst Robert Cole referred to in a recent article as “traveler empowerment.”

Cole noted, “Travelers want more control over options to highly customize their trip planning—either figuring it out themselves or being assisted by a human and/or AI agent.”

Major global insurance providers like Allianz Partners have responded by evolving their model from only offering travel insurance to positioning themselves as a “travel companion” accessible via mobile and other devices during every phase of a traveler’s journey.

“The majority of trips don’t involve major delays or emergencies,” Lustig explained, “but we want to be there for and with our shared customers every mile of their journey by providing services and solutions that are useful to every traveler.”

She added that the Allyz mobile app, launched in 2024, allows travelers to access a variety of tools and solutions in a single app while they are on the go. These include flight tracking, travel policy details and in-person or virtual medical treatment through the company’s global doctor visits service.*

As travel insurance providers respond to changing traveler patterns, technology continues to reshape the industry.

Conclusion

The U.S travel insurance market is growing at a rapid clip, with rising travel costs and increased interest in international travel prompting more travelers to seek protection for their trips.

At the same time, while year-end 2024 research showed that a majority of Americans plan to travel in 2025—including more than half who plan to travel more than they did in 2024—there is a heightened level of concern about the wide range of potential disruptions to their travel plans.  

Against that backdrop, as the market continues to expand, so do the benefits for all parties involved. Travelers gain peace of mind and protection against many potential disruptions to their trip plans. And that, in turn, enhances customer loyalty for travel sellers while supporting duty of care obligations and generating an additional revenue stream.

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