A survey has revealed a major gap in the travel insurance market, showing 8% of Australian adult travellers – 850,000 people – took their last overseas trip without cover.

The study, commissioned by the Federal Government and the Insurance Council of Australia, identifies a large proportion of this group as aged 18-29 – many of them visiting Asia on “schoolies” trips.

In this age group more than half mistakenly believe the Federal Government will pay for medical expenses and repatriation in an emergency.

The number of Australians hospitalised overseas last financial year increased to almost 1700 from 1453 the previous year.

One in seven people aged 18-29 travels without insurance, while almost twice as many travellers aged under 30 admit doing risky things while overseas (74%) compared with those aged over 30 (40%).

More than a third have experienced an event that could have been covered by travel insurance.

Of those aged under 30 who have had insurance, 36% did not look at the product disclosure statement to check it met their needs.

About 40% were unaware if their insurance covered them for medical expenses.