Agents ‘mis-selling’ travel insurance face regulation
The Government has signalled action against agents found to be mis-selling travel insurance.
Economic secretary to the Treasury Ed Balls initiated a public consultation into the issue following pressure from consumer groups such as Which? which highlighted problems in the summer (see previous TravelMole story).
He said: “We need to get to the bottom of whether travel insurance sold with a holiday is being mis-sold and whether we need to be doing more to educate consumers to consider the cover they want and ensure that they are properly informed.”
One solution would to bring agents under the rules of the Financial Services Authority – agents are currently exempted.
The review will investigate whether travel insurance sold with a holiday is being mis-sold and the consultation sets out options to improve the selling of insurance provided by travel agents.
“These options include strengthened self-regulation by the travel insurance industry and the possibilioty of full regulation by the FSA,” a Treasury statement said.
About 20 million people purchase travel insurance each year in a market worth £670 million, with polices sold by agents and operators representing almost half of all travel insurance sales in 2004, according to Treasury figures.
Balls called for evidence following the launch in August of a review of travel insurance which highlighted the different regulatory approach taken with the selling of travel insurance sold alongside a holiday and standalone travel insurance, a Treasury statement said.
In a statement to the Treasury Select Committe, Balls warned that many consumers bought insurance expecting to be covered for emergency medical treatment, repatriation and continuing carer expenses. He highlighted the need for travel insurance to be clear and transparent about consumers’ cover in the event of a terrorist incident.
He said: “In recent years there have been growing concerns from consumer groups and sections of the industry that the market is not working as well as it could, raising questions about whether regulation and appropriate redress should apply to the selling of travel insurance.”
Incidents when polices had not paid out included the terrorist bombings in the Red Sea resort of Sharm el Sheikh and Bali, according to the Treasury.
ABTA chief executive Mark Tanzer said: “We believe that our members are not guilty of significant levels of mis-selling but we know that the government is keen to ensure that the public is not put at potential risk.”
He added: “We’ll continue to provide the Treasury with all possible assistance so that they can achieve a view that accurately and fairly represents the interests of both the public and our members.”
ABTA is to publish the findings of an independent survey of 100 consumers to assess their experiences when buying insurance from members.
Report by Phil Davies
Phil Davies
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