BIBA calls for a level playing field across travel insurance sales

The British Insurance Brokers’ Association (BIBA) has responded to the Financial Services Authority (FSA) consultation paper outlining its members’ view that firms selling connected travel insurance should be subject to the same regulatory environment as specialist insurance intermediaries. From a consumer perspective, BIBA believes that the same suite of disclosures should be given, irrespective of where the consumer chooses to purchase their insurance protection

This view supports the HM Treasury statement that travel insurance is a “relatively more complex product compared to other general insurances and that firms the FSA regulate tend to have a better sales process and are less likely to suffer detriment”.

Graeme Trudgill, BIBA Technical and Corporate Affairs Executive, commented: “Our members are satisfied that the majority of the FSA proposals are acceptable but have significant concerns with two major areas of the proposals – Professional indemnity insurance and disclosure rules.”

BIBA agree with the FSA’s proposal to apply a minimum professional indemnity insurance requirement to all CTI firms, but BIBA feel strongly that it would be inappropriate for CTI firms to be subject to lower PII requirements and we urge the FSA to apply option one: 1 million Euros for a single claim and in total 1.5 million Euros. BIBA do not believe option two: £100,000 and £500,000 in total is sufficient for the sale of CTI and the retail customer should be protected to the same minimum standards irrespective of where they buy their travel insurance from by identical regulatory requirements to the rest of the insurance industry.

BIBA also disagree with the FSA’s proposal not to apply the Insurance Mediation Directive requirements for detailed status disclosure.

Steve White, BIBA Head of Regulation and Training, said: “Having a different disclosure regime is likely to lead to consumer confusion and potential detriment. The FSA should apply the rules in ICOB to CTI firms in the same way they currently apply to general insurance intermediaries.”

BIBA is pleased that the FSA has responded to its request that consumers are afforded the same protection they receive from professional insurance brokers and other FSA regulated firms, this is evident in the following proposals which are welcomed by BIBA:

The changes to PERG
The regulatory fees proposals
The proposed application of the training and competence regime
The proposals to apply client money requirements to CTI firms that do not have risk transfer agreements in place
The same cancellation rights, the FOS regime and the FSCS protection.