LONDON: The U.K.
treasury has launched an investigation into the sale of
travel insurance by travel agents in the light of evidence that these agents are selling the policies at inflated prices and with several exit clauses favorable to them.
Economic secretary to the treasury Ed Balls launched a public consultation Thursday saying travel insurers need to be open and transparent about consumers' cover in the event of a terrorist incident.
At present, travel insurance sold as part of
holiday package is unregulated, while sale of stand-alone cover is regulated by the Financial Services Authority (FSA).
The review may lead to regulation of the entire travel insurance sector by the FSA.
Balls earlier told the treasury select committee that many consumers bought insurance thinking they have cover for emergency medical treatment, repatriation and continuing carer expenses. It has been found that only 50 per cent of policies provide such cover. Consumer groups have been expressing concerns about this aspect and even sections of the
industry have been saying the market is not working as well as it could. These raise questions whether any regulation should be appropriate, he said.
Balls said one of the options is for FSA to have regulatory control of such insurance.
He said there is evidence to show that only 19 per cent of travel firms explained what their policies covered, compared with 81 per cent of banks and independent insurers selling stand-alone policies.
He also addressed the Association of British Insurers and said there is need to get to the bottom of whether travel insurance is being mis-sold.
The consultation follows the launch in August of a government review of travel insurance.
