UK investigates travel insurance sales

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Travel insurance is a priority on any holiday checklist. Indeed, it is said to be one of the few indispensable parts of planning a holiday anywhere, and the travel insurance industry is reputed to be worth more than £650m. However, how many people really know what they are getting when they buy travel insurance?

There are many different types of bundled packages offering different sorts of cover but often they are complicated, with making claims a difficult procedure. Hundreds of holidaymakers are therefore misled and sometimes even swindled each year by unscrupulous companies.

Following an eight month investigation into these problems, the Financial Services Authority (FSA) has subsequently said that "from 2009, all travel insurance which is sold with flights and holidays will be carefully regulated." At present, the FSA already governs stand-alone travel insurance and other types of insurance such as home and life but it has now seen that most of the problems lie in bundled packages sold by tour operators and flight companies. Critics have said that travel insurance lumped together with holidays is often too expensive, does not provide holidaymakers with adequate cover, and has conveniently escaped strict regulation.

Now that the monitoring of these travel insurance bundles will be stricter, holidaymakers will get better deals and will know what they are purchasing. As Ed Balls, Treasury Minister, said, "Evidence shows that companies regulated by the FSA are better at getting consumers to make an informed choice because they are better at explaining the key features and exclusions of the product."

Getting adequate travel insurance is clearly a serious issue, especially given that, according to the Treasury Select Committee, last year over 10 million tourists were not even insured for basic medical expenses when they were abroad. The cause of this was often due to confusing packages.

Until this regulation comes fully into play, it is worth shopping around carefully for travel insurance. At the very least, it should cover sudden illness and medical emergencies when you are away and cancellation of your holiday. Keep a copy of your policy and make sure you keep bills to support any claim you make. It is also worth remembering your rights with regard to purchase. For example, it is illegal for a tour operator to insist you take their own travel insurance, so you are under no obligation to choose a policy which will not be most beneficial for you. Until the regulations come into force, careful examination of the different policies and price comparison could save you a whole lot of bother.


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