The Financial Services Authority (FSA) has set out the final rules for regulating travel insurance sold alongside a holiday - known as Connected Travel Insurance (CTI). This is mainly sold by travel firms and holiday providers.
The new regime will come into force on 1 January 2009 and the FSA will start to accept authorisation applications for the new CTI activities from 30 June.
Dan Waters, Director of Retail Policy and Themes at the FSA, says: "Regulation is only seven months away and firms need to make sure they are fully prepared. We start accepting applications next month and firms are advised to apply early to ensure that they are ready in good time for the start of the new regulation next January. Our rules are designed to put in place a proportionate, risk-based regulatory regime for these sales of travel insurance, securing protection for customers."
The key benefits for consumers are:
- firms offering these products have the right resources and have staff who are competent to undertake this business;
- consumers will get clear, concise and consistent information about a firm's services and products on offer so they can make informed choices; and
- if things go wrong, consumers are able to obtain redress.
Travel firms will need to decide whether to be authorised by the FSA, be an appointed representative of another FSA-authorised firm, be an unregulated introducer (and only provide leaflets/information) or no longer offer insurance.
Connected travel insurance is travel insurance sold alongside a holiday or other related travel. Travel firms, such as travel agents, tour operators, coach tour operators, airlines, ferry companies, train companies and accommodation providers, often make available travel insurance connected to travel arrangements as a service for their customers.
Travel insurance pays if certain adverse events occur either before or while travelling. Most travel insurance will cover emergency medical bills and can also cover against other mishaps, such as loss, damage to, or theft of luggage or personal possessions, legal expenses, flight delays and cancellation.