Treasury probes travel insuranceGovernment move follows Which? investigation

04 August 2006

 

The government has launched an investigation after Which? revealed holidaymakers are getting a poor deal on insurance bought through travel agents.

Our investigation last month found that insurance sold by travel agents is often expensive and sold without the right questions being asked.

Almost two thirds of travel agents failed to ask about medical histories and 21 of the 26 travel agents didn't explain what the policies covered. 

None pointed out what wasn't covered and this makes it more likely people will be sold an unsuitable policy that may not provide adequate cover.

On the other hand, policies sold by banks and insurers are regulated by the Financial Services Authority, meaning there is a set sales procedure that must be followed.

'High and dry'

Their customers can also access the Financial Ombudsman Service if they think they have been mis-sold a policy - a protection denied anyone buying insurance through their agent.

Now Treasury minister Ed Balls has said the government will look into the sale of travel insurance purchased as part of a package to see whether travel agents should be doing more to ensure customers weren't left 'high and dry' when things went wrong.

He said: 'Millions of British families have worked hard all year to pay for their summer holidays and are hoping they pass off without a hitch.

'But thousands of holidaymakers will suffer cancelled flights, lost valuables, and even medical problems. And too many people will find they are not properly covered by their travel insurance.'

He added: 'Our investigation will ask whether it's fair to put all the pressure on ordinary families to read the small print and ask the right questions to make sure they are properly covered.

Not properly covered

'It will ask whether the travel industry should be doing more to ensure families are not left high and dry on their holidays and whether we need to strengthen regulation to protect them.'

Which? Principal Researcher Rebecca Fearnley welcomed the Treasury's announcement: 'Our most recent research shows that buying insurance through travel agents is often very expensive and sold without agents asking the right questions to make sure proper cover is being provided. This could mean that mis-selling cases might occur.' She said.

'There is no reason why travel agents should be excluded from insurance regulation. People should have the same protection and peace of mind on holiday regardless of whether they buy their cover from a travel agent or a stand-alone provider.'