Greater scrutiny of travel insuranceFinancial watchdog given extra powers
27 June 2007
Travel agents who sell insurance will be subject to greater regulation in future, the government has announced.
From January 2009 the Financial Services Authority (FSA) will scrutinise all providers of travel insurance.
It follows a scathing report by MPs earlier this year which found that a huge number of British holidaymakers were sold policies that didn’t meet their needs.
Which? also carried out its own investigation of travel insurance selling last year (July 2006) and recommended not buying policies from travel agents. We found that none of the travel agents visited followed the correct procedures to sell suitable policies. Two thirds of agents failed to ask about medical histories. Most didn’t explain what the policies covered and all failed to explain what wasn’t covered.
Lack of medical cover
The Treasury Select committee revealed that 10 million holidaymakers last year were left without medical cover in the event of terrorist attacks. MPs concluded there was significant evidence of consumer detriment in the travel insurance market and called for greater regulation.
The government has now said the FSA will be given additional powers to clamp down on any bad practice found across the whole travel insurance industry.
Ed Balls, economic secretary to the Treasury, said: ‘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.
‘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.’
Peter Vicary-Smith, chief executive of Which?, said: 'We have always been adamant that there is no reason for travel agents not to be regulated when selling travel insurance. This finally offers consumers the protection they deserve.'
The present Which? advice is that you have the best chance of buying the right travel insurance policy if you buy online.
Our top five tips to get the right cover are:
> Declare any information that could lead to a claim.
> Check cover limits and exclusions.
> Watch out for excesses.
> Read the small print.
> Tell the insurer about any pre-existing medical conditions affecting you or anyone else on whom your holiday plans depend.