Balls lays into travel insurers over lack of cover for terrorism

Thousands of holidaymakers are leaving home without realising they have no insurance cover to protect them in the event of a terrorist attack, Ed Balls, the Economic Secretary to the Treasury, warned yesterday. Mr Balls accused travel insurance providers of failing to make it clear to customers that terrorism is routinely excluded from many policies.

"I am concerned that consumers may not always understand whether they are covered for such risk when purchasing policies," Mr Balls said. "The issue here is about both educating consumers to consider the cover they want when they are buying travel insurance and ensuring that consumers are properly informed."

Research published by the Association of British Insurers (ABI) earlier this year found that just 50 per cent of travel insurance policies included terrorism cover. In cases where policyholders are not covered, they would be unable to claim for the cost of medical treatment, repatriation or even loss of possessions following a terrorist incident.

This has already become reality for victims of several terrorist outrages overseas, including last year's Sharm el-Sheikh bombing in Egypt when the Government stepped in to pay the medical expenses of several people caught up in the incident and to meet the cost of getting relatives to Egypt.

However, a spokesman for the ABI said the number of policies including the cover had increased dramatically in recent years. Historically, terrorism has been excluded as part of a general exclusion in almost all travel policies relating to war, but the ABI said this was now less often the case.

The spokesman said: "Mr Balls is not criticising insurers for not providing the cover; he's saying that terms and conditions need to be properly brought to customers' attention and we would agree with that."

Graeme Trudgill, a technical manager at the British Insurance Brokers Association, which provides independent advice on travel insurance, said clearer information on terrorism cover was long overdue. "People just don't realise terrorism is excluded," he said.

Mr Balls made his comments as he launched the next stage of a Government investigation into sales of travel insurance by travel agents and tour operators.

This type of cover is currently the only part of the travel insurance sector not regulated by City watchdogs, but the Treasury is considering whether to bring sales of such policies under the supervision of the Financial Services Authority.