The value of travel insurance premiums written in Australia will not have recovered to levels seen last year by 2024 due to international travel restrictions, analytics firm GlobalData predicts.

Australia’s direct written travel insurance premiums are forecast to slump 7.7% to $1.1 billion this year as the COVID-19 pandemic forces travellers to stay put.

Premiums in the local travel insurance industry will almost flatline for years, showing annual compound growth of just 0.2% from 2019-2024, GlobalData predicts.

By 2024, premiums will only have recovered to $1.18 billion, it forecasts, still below the $1.2 billion achieved last year when premiums surged 46%.

Analyst Deblina Mitra says Australia is now experiencing a second wave of COVID-19 outbreaks and the travel insurance recovery depends on the success of containing the pandemic here and around the world.

“Re-imposition of travel restrictions is expected which will impact travel insurance,” Ms Mitra says. “Even after the possible economic recovery expected from 2021, the growth of travel insurance is likely to be a subdued one.”

GlobalData forecasts direct written travel insurance premiums in Australia will be $1.12 billion next year, followed by $1.14 billion in 2022 and $1.16 billion in 2023.

Leading insurers are providing full refunds for policies falling in the lockdown period, GlobalData notes, which is expected to put further pressure on profitability.

Zurich-owned Cover-More, which holds a dominant 30.7% share of the market by revenue, has laid off 10% of its workforce and said in June it expects to refund premiums for at least 250,000 travel insurance policies this year due to the coronavirus pandemic. Last year, the average cost of a policy was $330, with wide variances according to the countries visited.

Several Australian states and territories are set to open gradually for domestic tourism from the third quarter of 2020 but international travel is restricted until September 17.

Qantas has stopped all international flights apart from a few to New Zealand until March 2021. It expects domestic flights to be restored to pre-COVID-19 levels by 2022 while international demand is expected to regain only half pre-pandemic levels.