A report from the UK’s Treasury Department, which calls for more regulation and control over travel insurance sold through tour operators and travel agents, has brought a response from the Association of British Insurers.
On the positive side the ABI said it recognized that “up to 4.5 million travelers would benefit from the added protection.” It listed the following:
– The Financial Ombudsman Service is extended to cover customer disputes arising from travel insurance sold as part of travel package arrangements.
– Local authority trading standards regulate the selling of travel insurance sold through tour operators and travel agents, similar to the way they monitor extended warranty sales.
– There should be an industry Code of Practice to ensure best practice.
However, the ABI doesn’t see the same urgency that the Treasury Department apparently does for new regulations. In a companion bulletin it pointed out that “consumers [already] benefit from a very competitive market when buying travel insurance.” Therefore any specific regulation should apply to only to travel insurance sold through tour operators and travel agents.
Nick Starling, the ABI’s Director of General Insurance, stated:
“The [Treasury] Committee is wrong to call for a crackdown. They have produced little or no evidence to support their call.
“The risk of consumers getting a bad deal is very low. Fifteen 15 million policies were sold last year which generated only 1,700 complaints to the Financial Ombudsman. Every week travel insurers pay out over £4 million [$$7.95 million] in claims.
“Protection is available for everyone who wants to buy it. Over a half of all travel insurance policies already cover the cost of medical treatment following a terrorist attack. We believe that consumers should have a choice and the right to shop around.
“The Committee draws attention to travel insurance sold by tour operators and travel agents who, unlike insurers, are not regulated. We believe that regulation through Trading Standards would provide sound protection for consumers without imposing unnecessary burdens on travel agents or the FSA. And by extending the Financial Ombudsman Service to cover these sales, all travelers would be guaranteed the same high level of protection.”
Jane Milne, the ABI’s Head of Property and Travel Insurance, indicated that the “UK travel insurance market is highly competitive. There is only a low risk of customers getting the wrong deal. Current FSA regulation of insurers is too burdensome, but travel agents are in effect unregulated. Our proposals will ensure that everyone buying travel insurance enjoys the proper level of protection, while also maintaining a thriving market.”
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