Travel agents face inquiry into holiday insurance problems

Travel agents face inquiry into holiday insurance problems

An investigation into alleged mis-selling of travel insurance for package holidays is to be launched by the Treasury today. Ed Balls, the economic secretary, is concerned about a loophole that exempts such insurance sold by travel agents from Financial Services Authority regulations that apply to stand-alone cover.

When the government last considered this in 2003, travel agents protested that their code of practice gave enough consumer protection. But an investigation by Which? magazine last month found holidaymakers were losing out.

The magazine recommended people should not buy their insurance from travel agents after a survey showed only 19% of them explained what was covered, and none explained what was excluded. Banks and individual insurers did much better in a comparison, though only 56% explained what the insurance did not cover.

The Treasury believes too much onus is put on individual policy-holders to find out what their insurance covers. One common complaint is a failure to explain what insurers mean by terms such as "close relative", with many firms refusing to compensate for a cancellation for anything but death or illness in the immediate family. Consumers are also expected to check whether they need receipts for valuables that have been lost or stolen, and to disclose pre-existing medical conditions.

"Millions of British families have worked hard all year to pay for their summer holidays and are hoping they pass off without.....continued below

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a hitch," Mr Balls will say today. "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."

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