Tourism insurance: A new frontier as Bangladesh lags behind

News desk: Tourism insurance, commonly known as travel insurance, provides financial protection to travelers against unforeseen events such as medical emergencies, trip cancellations, flight delays, lost baggage and personal liability during journeys. It typically reimburses non-refundable expenses, covers emergency medical evacuation and repatriation and offers round-the-clock assistance, helping travelers manage risks more effectively and travel with greater confidence.

Globally, the travel insurance market is experiencing robust expansion amid rising international tourism and increased risk awareness. Industry estimates suggest the market was valued at approximately $27 billion in 2024 and is projected to reach around $60 to $65 billion by 2030, reflecting strong growth momentum. Some longer-term forecasts indicate even higher expansion, driven by sustained demand. This upward trajectory is largely attributed to the post-pandemic rebound in travel, the growing use of digital platforms for purchasing policies and increasing demand for protection against health risks, geopolitical uncertainties and natural disasters. Travel insurance also plays a stabilising role in the broader tourism ecosystem by reducing financial exposure for both travelers and service providers. According to the World Travel & Tourism Council, tourism contributes roughly 10 percent of global GDP, highlighting the importance of risk mitigation mechanisms within the sector.

Travel insurance policies generally include coverage for trip cancellations and interruptions, ensuring reimbursement for non-refundable costs, as well as emergency medical and dental treatment that often extends beyond standard health insurance limits. They also provide for emergency evacuation and repatriation, compensation for travel delays and protection against lost or delayed baggage. Besides, many policies include accidental death and personal liability coverage. Optional extensions are often available to cover pre-existing medical conditions, adventure activities, rental vehicle damage and cruise-specific risks, allowing travelers to tailor coverage to their needs.

Leading global providers such as Allianz Global Assistance, AXA Assistance, AIG through its Travel Guard platform, Berkshire Hathaway Travel Protection, Seven Corners, Generali Global Assistance and World Nomads continue to expand their offerings through digital innovation, extensive service networks and flexible policy design. Their presence has helped standardise products and improve customer trust through efficient claims handling and global assistance capabilities.

In contrast, Bangladesh’s insurance sector remains relatively underdeveloped, with overall insurance penetration estimated at below 0.5 percent of GDP, one of the lowest in Asia. Within this landscape, travel insurance is primarily available for outbound travelers, while products specifically tailored for inbound tourists remain limited in both availability and visibility. Consequently, most international visitors rely on policies purchased in their home countries, which may not always be fully aligned with local conditions or risks. This gap can influence traveler perceptions, particularly in a destination known for attractions such as Cox’s Bazar, the Sundarbans and a range of cultural heritage sites, but where concerns related to healthcare access, emergency response and travel disruptions may persist.

Bangladesh’s tourism sector currently contributes an estimated 3 to 4 percent to GDP, with inbound tourism earnings remaining modest compared to regional peers. Countries such as Nepal, for example, derive a larger share of their GDP from tourism, supported by robust ecosystem readiness and supporting services. Greater integration of travel insurance into the tourism value chain could enhance visitor confidence, reduce financial risks for both travelers and service providers and encourage higher-value tourism. It could also contribute to increased foreign exchange earnings and employment generation across hospitality and related sectors.

To better align with global developments, Bangladesh may consider encouraging partnerships with international insurers, expanding digital distribution channels to improve access to policies and integrating insurance into visa processes or organised tour packages. Increased awareness initiatives could also help highlight the importance of travel risk protection among both domestic stakeholders and international visitors. As global travel becomes increasingly risk-aware, tourism insurance is evolving into a critical component of a resilient tourism ecosystem. Strengthening this segment could support Bangladesh in enhancing its competitiveness and unlocking greater potential in the international tourism market.