Treasury announces investigation into travel insurance

The UK Treasury has announced that it will hold an inquiry into the sale of travel insurance purchased as part of a package.

The investigation has been launched in responses to concerns from consumer groups. The Treasury said that the investigation would examine the specific problems faced by consumers purchasing travel insurance as part of a package and considering whether any changes to the regulatory framework are required to provide greater protection for them.

Twenty million people buy travel insurance every year, covering medical expenses, the replacement of lost or stolen items, cancellation of travel and other items. Many of these people buy their travel insurance from travel agents alongside their package holiday.

The travel insurance market was is worth around £670 million in 2006, while insurance sold by travel agents and tour operators accounted for just under 50% of all travel insurance sales in 2004.

The government last looked at the issue of travel insurance in 2003 and while the Treasury had decided that there was insufficient evidence of problems with consumer protection to warrant changes to the regulatory framework, it undertook to keep the position under review.

Among the issues considered in the review will be options for regulating the sale of travel insurance sold as part of a package including whether they should be subject to Financial Standards Authority regulation.

Launching the review, Economic Secretary to the Treasury, Ed Balls, said: "Millions of British families have worked hard all year to pay for their summer holidays and are hoping they pass off without a hitch. But thousands of holidaymakers will suffer cancelled flights, lost valuables and even medical problems. And too many people will find they are not properly covered by their travel insurance.

"Our investigation will ask whether it's fair to put all the pressure on ordinary families to read the small print and ask the right questions to make sure they are properly covered. It will ask whether the travel industry should be doing more to ensure families are not left high and dry on their holidays and whether we need to strengthen regulation to protect them."

(KMcA)