Consumers demand full regulation of travel insurance

New research published by the British Insurance Brokers’ Association (BIBA) reveals that 97% of consumers wholeheartedly back the Government’s plans to protect them from travel agents who fail to explain the full details of their travel insurance policies.

The independent research, conducted by Populus, also reveals that a staggering 72% of customers who recently bought travel insurance had not been advised whether terrorism cover was included in their policy.

The research follows the launch of a Government inquiry into the sale of travel insurance as part of a holiday package. Whereas the stand-alone sale of travel insurance is subject to the same regulatory controls as the sale of other forms of insurance, travel insurance sold as part of a package is currently exempt from those controls.

The British Insurance Brokers' Association (BIBA) has been campaigning for some time to ensure that customers are treated fairly when purchasing travel insurance, and fully supports the intentions of this inquiry and recent comment made by Economic Secretary Ed Balls.

According to Treasury, 20 million people buy travel insurance every year, covering medical expenses, the replacement of lost or stolen items, cancellation of travel and other items.

Other key findings of the research include:

45% of travel agents / tour operators failed to advise of the policy excess

56% of travel agents / tour operators failed to advise on how to make a complaint

When purchasing travel insurance from a travel agent / tour operator, 53% of consumers relied on them to explain the policy, and only 47% read the small print

The results on regulated firms (insurers, brokers, banks etc) have been combined and compared against the results of the unregulated firms (travel agents and tour operators):

Less than half (42%) of consumers who bought policies from travel agents / tour operators were advised about hazardous sports compared to 67% from insurance brokers and an average of the FSA regulated insurance market of 62%

Just 44% of travel agents / tour operators explained how to go about making a claim to 69% from insurance brokers and an average from the FSA regulated market of 62%

Only 46% of travel agents / tour operators gave advice about policy limits in comparison with an average of 68% of regulated firms.

Commenting on the research and the Government’s plans, BIBA Chief Executive Eric Galbraith said: “It is essential that consumers are fully protected.

“Travel insurance is vital when we jet off on our holidays, and it is the role of the provider to ensure that consumers are both fully covered and understand the limits of their policies.

“BIBA brokers, and the rest of the regulated industry has been fulfilling this commitment for years, and the Government’s proposals would ensure that travel agents and tour operators fall into line.

“BIBA fully supports the Government’s work in this area, and will continue to campaign to ensure that all customers are treated fairly.”