`Buy our insurance or you won't fly'

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ONE OF Britain's biggest travel agents has warned a customer that he could be turned away from his holiday flight because he insists on arranging his own insurance.

Staff at Lunn Poly have claimed that other travellers have been denied boarding at the airport because they failed to buy a company's insurance policies - though no one in the travel industry seems able to supply proof of such an incident.

The case emerged during an Independent on Sunday investigation of the high profits being made in Britain's pounds 500m-a-year travel insurance industry. A new survey has found travellers are wasting millions on overpriced or unnecessary travel insurance, often paying three times as much as they need for a policy.

The Government outlawed the linking of insurance to holiday discounts one year ago this week, ending a lucrative source of earnings for travel agents. But it appears some holiday companies are resorting to misrepresentation to sell highly profitable policies. Lunn Poly, part of Britain's biggest tour operator, Thomson, told a reader of the Independent on Sunday that he risked losing his holiday because he declined the company's insurance. He was made to sign a form waiving his rights if he is denied boarding.

The man, who does not want to be named in case he is refused boarding at Gatwick, went to an east London branch of Lunn Poly to book a week's holiday in Cuba. "They said I couldn't make the booking without taking out their insurance. When I queried this, they said I was entitled to take out my own insurance but they would be very surprised if it was as good as theirs."

The reader is an experienced traveller and always arranges cover through his broker. But Lunn Poly would not accept his booking unless he paid for its insurance at the same time. "They told me I'd get a refund if I showed them the other policy within seven working days."

Profit margins on insurance sold by travel agents are often way above the earnings on the holidays themselves. "Lunn Poly's policy cost pounds 65.50 for a week in Cuba. Direct Travel Insurance charged me pounds 28 for exactly the same level of cover, bar one tiny clause."

The travel agent discovered the exception during a line-by-line trawl through the small print. The difference hinged on a minor benefit: a payment of pounds 10 per day if the policyholder is hospitalised. Lunn Poly's policy provided this, while the alternative did not. "They said, `We have to warn you that your insurance fails to be equivalent to or better than ours, and you could be turned away by the tour operator at the airport.' "

The tour operator is Panorama, based in Brighton. Martin Young, the company's sales and marketing director, said he had never heard of anyone being denied boarding by Panorama or any other tour operator because of "inadequate" insurance: "We do not check insurance details at the airport." Nor does the airline involved, British Airways.

Although there is no legal requirement for holidaymakers to have travel insurance when going abroad, agents and operators often make it a condition of booking. "It's right that travel agents should ensure customers have the right insurance," said a spokesman for the Association of British Travel Agents (Abta). Holiday companies are entitled to do this - but not to demand a particular policy.

Lunn Poly's head office denied that it is company policy to warn customers that they may be refused boarding. "It appears in this case that the sales consultant has been rather over-zealous," said a spokeswoman. "We would like to reassure the customer that, provided his insurance cover is equal to that provided by the tour operator, he will not be denied boarding."

The reader is uneasy about this explanation: "It sounds to me that they could do the same comparison again and conclude that my cover isn't equal, and turn me away."

A new survey carried out for the insurance company CGU Direct shows that the premiums on policies sold at some high-street travel agents are typically three times higher than for similar direct-sell policies.

The survey shows that a family of four taking Lunn Poly's cover for a fortnight's holiday in Europe would pay pounds 194.80, compared with pounds 70 through Boots Travel Cover and pounds 51 with CGU Direct. Arlene Steward of CGU said: "The worry is that many holidaymakers may mistakenly believe that they need to take out the travel agent's policy as a condition of their holiday."

Evidence from Abta shows that travellers are increasingly shopping around for insurance rather than accepting the policy offered by the travel agent. The association's head of member services, Stephen Alcock, said: "We did have around two-thirds of the travel insurance market; now we have less than half."

The Independent on Sunday's research reveals that some agents are resorting to scare tactics to claw back business - at the expense of their customers. Last night the Cuba-bound traveller said: "Talk about rip-off Britain - they're even making it hard to leave the country without being ripped off."