FSA regulation of travel insurance – are you ready?
Andy Juggins, AIG vice-president travel for UK and Ireland, discusses the implications of new regulations for the UK travel industry
DO YOU SELL TRAVEL INSURANCE? Love or loathe the new regulations? Three-minute questionnaire, click here.
From January 2009, sales of travel insurance by travel agents, tour operators and other sectors of the travel industry will be regulated by the Financial Services Authority (FSA).
Sales of travel insurance through other outlets have been regulated by the FSA for some time, but the travel industry has had an exemption when insurance is sold alongside a travel or holiday booking.
AIG UK is advising the travel industry to act now to secure their future sales of travel insurance rather than wait for the January deadline. Companies must discuss with their travel insurance partner how they can comply with FSA regulation, and put the correct training and procedures in place well before the deadline.
There has been much talk about what the regulations mean, and as the FSA is still consulting on this issue, it will be a little while yet before insurance companies can offer clear and informed advice.
But basically there are four scenarios facing the travel industry, and it is up to each company to decide its own way forward.
The scenarios are:
1. To apply for direct authorisation from the FSA – registering may have significant administration costs which few travel companies are likely to favour.
2. To work with your insurance partner to achieve Appointed Representative status.
3. To stop actively selling insurance and become an introducer of business to insurance companies, offering no advice and taking no money.
4. To give up selling insurance completely
The first three scenarios form the basis for discussion between each company and its insurance provider.
The fourth scenario is unlikely to be contemplated by any company which receives a significant ancillary income from travel insurance and wishes to continue to provide a full service to customers.
For companies selling online or through call centres compliance will be simpler, but when selling face-to-face there are more issues.
But we at AIG UK are absolutely committed to working with our travel partners to find a way forward.
The last thing that anyone wants is for more people to travel abroad without insurance because their travel provider no longer offers it.
My advice to the travel industry is not to delay, but to start planning now for what they will do from next January.
*DO YOU SELL TRAVEL INSURANCE? Love or loathe the new regulations? Three-minute questionnaire, click here
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