The Predictions 2026 features keep coming through, here’s the latest;
Carl Carter is a long-standing voice in the travel insurance sector, with more than 30 years of c-suite and insurance expertise, including two years as CEO and founder of CSC Global Partners and 11 years as the former Managing Director of IMG Europe. He has led strategy, innovation, product development, and distribution across more than 40 countries, giving him a uniquely global perspective on where the industry is heading next. Now, as a strategic advisor to the travel resale platform Transfer Travel, Carl explains how next year will be a defining year for the travel insurance sector.
Three forces are now converging to reshape the market. AI is moving from a back-office tool to a front-line decision-maker, insurance capacity is tightening as major insurers consolidate, and regulatory pressures threaten to redefine how products are designed, priced, and sold.
AI: Unlocking new efficiencies brings new challenges
AI adoption in the travel insurance market is moving far beyond basic efficiency gains. What began as a way to automate routine tasks is now evolving into systems that interact directly with customers, shape underwriting decisions in real time, and influence outcomes across the policy lifecycle.
This shift is unlocking significant new potential and exposure in equal measure. Smarter products, faster responses and more personalised experiences are now all possible. However, AI is also taking insurers into a far more complex regulatory and data governance landscape. Insurers will need to treat AI as a material risk, meaning that every model needs an owner and every decision needs a clear trail, ensuring that all outcomes remain unbiased and accountable. This is not just from a compliance perspective, but also to ensure trust among customers.
As AI tools are now directly interacting with customers and influencing real decisions, the risk profile spikes sharply. Models that misprice or misclassify risk, hidden bias that disadvantages certain groups, and data-hungry systems that heighten privacy exposure all pose real challenges. Alongside this is increasing scrutiny regarding accountability, should an algorithm make an error.
Hyper-personalised underwriting through AI also threatens to over-segment the market, edging toward a world where perfect risk scoring undermines the industry’s core purpose and the ability to pool risk across cohorts. The challenge is not whether to adopt AI, but how to harness its speed and efficiency without letting accuracy, fairness, or the sector’s foundational principles collapse along the way.
UK regulators are paying closer attention to how firms justify the data behind automated decisions, pushing insurers to tighten governance over third-party feeds, cloud ecosystems and internal data flows. For UK insurers, the competitive commercial edge will not come from the fastest adoption, but from safe, accountable integration.
Retrenchment and strategic realignment
These technological pressures sit alongside a parallel economic shift. Across the UK market, several major insurers are retracting from smaller schemes and partnerships. The reason isn’t just about profitability, but because managing a patchwork of minor partners has become operationally inefficient when margins are under pressure.
Rising claim values and ongoing price pressures from comparison sites have squeezed margins, forcing a rethink of where and how insurers wish to operate. With a natural bias to centrale consumer decisions around price rather than product quality, comparison sites run the risk of fuelling a race to the bottom pricing model. Features, limits, and add-ons are standardised across aggregator listings, making it difficult for insurers to differentiate on value, unique features or risk management expertise. High commission structures compound the problem, leaving little room for manoeuvre even as costs climb. The resultant risk is that price-sensitive consumers are driving premiums lower while expenses keep rising.
In response, insurers are narrowing their focus. Partnerships are being streamlined in favour of larger and long-term relationships. Product portfolios are also shifting towards modular structures, tiered benefits, and sharper pricing for high-cost geographies and age segments. Smaller partners, therefore, face a tougher environment, and success increasingly hinges on an insurer’s ability to combine disciplined capacity management with cost control.
Navigating growing regulatory pressures
Overlaying these commercial and technological shifts is intensifying regulatory scrutiny. The proposed Which? Super Complaint has placed a spotlight on travel insurance, and reactions inside the market are divided. On paper, its goal is fairer treatment of consumers, but in practice, it could inflate premiums and narrow cover.
Insurers broadly support better transparency and fairer outcomes, yet many warn that the measures could burden an already pressured market. Firms are already grappling with misrepresentation or non-disclosure on applications, rising claims costs, and margin compression from distribution on comparison sites. Added regulatory obligations risk pushing some products beyond viability.
A strong regulatory response could reshape how travel insurance is sold, priced, and serviced in the UK. Insurers may react by tightening underwriting, reducing coverage, raising premiums for higher-risk groups, or cutting back add-ons. The challenge will be balancing consumer protection with operational sustainability in an increasingly scrutinised market.
Beyond compliance, reputational risk is another concern. Public scrutiny via Which? and the press about declined claims could undermine consumer trust, particularly for firms with complicated policies. This will create additional pressures, driving competition around transparency rather than price alone. Brands need to balance consumer feedback focus from shop window reviews via the likes of Trust Pilot and Feefo towards the service outcome reviews on the likes of Claimsrated.com and Claimscore.co.uk which highlight the consumer experience at point of claim. Compliance burdens are rising too, with stronger controls and tighter claims governance required, which can be especially challenging for smaller players.
Strategic action for 2026
Together, these three forces signal a major turning point for travel insurance in 2026. AI, capacity pressures, and regulatory scrutiny will reshape how products are built, priced, and delivered.
As margins tighten and scrutiny increases, insurers are being forced to move beyond the traditional “pay or decline” claims framework. Writing off the full value of cancelled trips is becoming harder to justify, particularly where customer dissatisfaction carries reputational risk and the travel provider simply goes on to resell the travel arrangements all over again.
In response, some insurers are beginning to explore recovery-led operating models that retain value even when claims cannot be paid in full. Digital resale and travel arrangement salvage mechanisms are emerging as a way to reduce net claim costs while offering customers a more constructive outcome. These approaches do not replace underwriting or claims decisions, but they do introduce a third path that supports fairness, transparency and cost control.
Insurers that tighten governance, simplify portfolios, and invest in accountable technology, while also rethinking how value is managed post-cancellation, will be better placed to navigate the next phase of market change. Those who delay will face higher costs, fewer partners, and far less room to manoeuvre.
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