Travel trade loses the battle on travel insurance

The Economic Secretary to the Treasury, Ed Balls, has announced that the Government intends to give the Financial Services Authority (FSA) the responsibility for regulating the selling of travel insurance sold along with a holiday.

 

This means that travel agents’ long battle to remain outside the regulatory insurance structure that every other seller of insurance has to comply with, has failed.

 

The FSA at present only regulate travel insurance sold on a stand-alone basis.

 

Ed Balls, Economic Secretary says: "Twenty million people are buying travel insurance each year, and some are putting themselves and their families at risk by buying travel insurance that may not cover their needs. This happens as consumers have a 'knowledge gap' when buying travel insurance, as they often do not understand what they are buying or what it covers.

 

“Evidence shows that companies regulated by the FSA are better at getting consumers to make an informed choice because they are better at explaining the key features and exclusions of the product and guiding the customer through the sales process.

 

“I have therefore decided to make all travel insurance policies sold in the UK to be done through FSA regulated companies.

 

“This will come into effect from January 2009.

 

“Consumers in the future buying travel insurance sold alongside their holiday will get the same core regulatory protection and rights as consumers buying stand-alone travel insurance do now."

 

Travel firms that decide not to seek FSA authorisation will be able to sell travel insurance through an appointed representatives route i.e. the travel firm will be able to sell travel insurance on behalf of a FSA regulated company.

 

The travel trade will inevitably complain that their self-regulatory system should continue. But the decision is not reversible – so such protests are pointless.