Tough new regulations for travel insurance have been announced in an attempt to curb confusion and "consumer detriment" surrounding one-off policies provided by travel specialists.
From January 2009, all connected travel insurance (CTI) sold with a holiday, travel tickets, accommodation or tours will be regulated by the Financial Services Authority (FSA) under the same rules that apply to standalone travel insurance policies sold through insurance companies. Firms selling travel insurance will have to demonstrate that customers are advised and sold suitable products for their needs, that they can seek redress if things go wrong and that the information they receive is clear. Policy providers will also have to be able to prove they have appropriate resources and competent staff in order to trade.
The Economic Secretary, Ed Balls, said the move would reduce the risks consumers unwittingly place themselves at due to a "knowledge gap" over travel insurance: "Companies regulated by the FSA are better at getting consumers to make an informed choice," he said. "Consumers in the future buying travel insurance sold alongside their holiday will get the same core regulatory protection and rights as consumers buying stand-alone travel insurance do now."
James Harrison, the chief executive of insurance comparison service Insurancewide.com, said the change was long overdue. "This is very good news for unsuspecting travel insurance customers," he said. "Although the new rules don't come into force until 2009, we hope it will provide an incentive for holidaymakers to think harder before they buy."
CTI was originally excluded from regulation in 2005 to cover general insurance products but will now be brought under the same Insurance Code of Business rules, which have also been tightened this week in an attempt to bring them further into line with the FSA's long term policy of principles based rather than prescriptive regulation.Reuse content