Recently, the US Travel Insurance Association (USTIA), representing American travel insurance companies, announced that in 2018, Americans spent nearly US$3.8 billion on all types of travel insurance products—up 41 per cent since 2016.
Pretty impressive figures—until you look at comparable data from Canada, which shows that Canadians (who represent but one-tenth the population of the US) are now approaching CA$1 billion in premiums spent for travel protection products in 2018 (CA$990 million, to be more precise), according to the Conference Board of Canada.
Moreover, the USTIA survey has shown that the $3.8 billion covered only 66 million travellers (one-fifth of the US population), while Canadian data show that among 18- to 34-year-olds, 64 per cent were covered by travel insurance on their last trip out of the country, and 89 per cent of Canadians 55 and older buy insurance when travelling beyond Canada’s borders.
What we can glean from this is that Canadians are far more savvy about the need for and use of travel insurance than their American peers.
Among the top 10 nations with the most frequent travellers (the Scandinavians lead this list by far), Canadians average one international trip per person each year. Americans average only one-fifth that amount—or one international trip per five people. It must said, however, that Americans are among the leaders in domestic travel, totaling 6.67 total trips per person per year.
Americans prefer travelling closer to home
The reason generally given for this disparity between travel patterns in Canada and the US is that Americans do have a lot of choices (from skiing to beaches, cities to deserts) within their own borders to enjoy. And this may also account for the modest use of passports by Americans. According to Statista, the international data analysis service, 66 per cent of Canadians have current passports compared to only 42 per cent of Americans.
And there is also a pretty stark difference between Canadians and Americans in their use of travel insurance.
According to USTIA surveys, almost 90 per cent of Americans buy insurance not so much to protect their health as to protect their trip costs: trip cancellation, interruption, baggage loss, and missed connections. Though most of these American travel insurance plans have some emergency health benefits, their benefit levels (often amounting to only $10,000 or $25,000) are sparse compared to the multi-million-dollar coverage levels available in Canadian plans.
US medical coverage: Not a high priority
Only 6.3 per cent of travel insurance plans sold in the US are primarily designed for medical and medical evacuation benefits (a few of them going as high as $1 million in coverage, but many top out at $500,000 or even $100,000 benefit levels—still far below Canadian coverage levels).
Why this disparity? It has to do with America’s fragmented health care system. Almost 80 per cent of Americans draw their health care insurance coverage from private employer plans or Medicare (for the elderly) plans. Many of these are supplemented by private insurance that often offers emergency medical coverage for “out of area” services (including international travel).
Because US travel policies are considered secondary insurance, claims are normally referred back to the primary health insurer for payment. Thus, US travel insurers generally have less risk exposure for out-of- country health costs than do Canadian insurers who are liable for covering at least 95 per cent of out-of-country medical bills. And for travellers from Ontario, that coverage rises to 100 per cent on January 1, 2019, as OHIP ceases any payment for medical coverage of international travel.
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