AIG is preparing to overhaul the rating system it uses to price travel policies in 2006.
The insurer is holding talks with brand partners including Insure & Go, eBookers and Boots about tailoring the pricing of policies much more closely to the actual risk they cover.
Jonathan Cooper, vice president of travel, accident and health at AIG Europe, said: "The one-size-fits-all model for travel insurance needs to be changed. We have access to data captured by our brand partners which will allow us to underwrite in a much more sophisticated way than we have been used to."
Travel insurers currently base quotes on a limited range of factors including age, area travelling to and length of stay.
AIG will use a rating structure which takes account of the country visited rather than just the area, the claims history of the policyholder and the time elapsed until the trip is taken - which can affect the likelihood of cancellation.