Investigation into the sale of packaged travel insurance

Richard Mason, director of insurance at price comparison website moneysupermarket.com, comments on the Treasury’s investigation into the sale of packaged travel insurance:

“It is quite shocking it has taken this long for travel agents to be put under the spotlight, given the number of insurance policies they sell every year as part of holiday packages.

“The rest of the general insurance industry has been regulated since January 2005 and it has to comply with Treating Customers Fairly (TCF) and be able to provide Key Fact Illustrations (KFI). Generally, the insurance policies sold by travel agents are significantly more expensive than buying standalone cover and if you did have to make a claim, they are under no regulatory obligation to honour it. This is a ludicrous situation to be found in and I would advise holiday makers to save themselves some money and opt for standalone cover. An annual multi-trip European policy can be bought for as little as £26.

“It is extremely refreshing the Treasury is calling for insurers to be transparent about consumer cover in the event of a terrorist-related incident. We have found that most travel insurers will not cover you for acts of terrorism and this general stance extends to delays, missed flights or cancellations caused by the threat of terrorism also. In the recent climate, this is certainly a grey area and travellers should not be left in the dark.

“The Treasury’s investigation is long over due, even though any real changes may not happen until long after the consultation period has closed in February 2007. I don’t expect that travel agents will offer competitive deals in the meantime. Not surprisingly, just under 50 per cent of travel insurance policies, representing around £335 million worth of cover, were sold through travel agents in 2004, a worrying statistic indeed. The need to shop around for the best cover and price is clear to all.”