Travel Insurance Probe Timely

by Robin Pilgrim, LawAndTax-News.com, London

15 August 2006

Coming ahead of the ongoing travel chaos caused by the alleged planned terrorist attacks on transatlantic flights, and the resultant security crackdown, a probe into travel insurance launched by Economic Secretary to the UK Treasury, Ed Balls is being seen as somewhat prescient.

Earlier this month, Mr Balls announced that the government would be launching a new inquiry into the sale of travel insurance purchased as part of a package.

20 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.

Whereas the stand-alone sale of travel insurance is subject to the same regulatory controls as the sale of other forms of insurance, travel insurance sold as part of a package is currently exempt from those controls.

Seeming to predict the forthcoming crisis as he launched the review on August 4, the Treasury Economic Secretary observed that:

"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. The first step will be to collect all the evidence from consumers and industry experts - and then work out what needs to be done."

The review will work with business and involve a full public consultation to be launched early this autumn.

HM Treasury will consider the extent to which the travel industry has introduced measures to improve the protection of consumers purchasing travel insurance and whether these are working. If any additional regulatory safeguards are considered necessary, they will be implemented in a sensitive and proportionate manner, with particular concern to limit any additional costs for the industry, which would ultimately be passed on to consumers.

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