FSA to begin regulation of travel insurance sold with packages

Beginning in 2009 the Financial Services Authority will regulate travel insurance sold as a package with airline flights and holidays, along with the stand-alone travel insurance that it already regulates. Criticisms that the package insurance is too costly and doesn’t cover travelers adequately led to an investigation by Treasury. The inquiry found that up to 10 million UK residents who traveled out of the country last year did not have enough coverage for medical expenses or terrorist attack. Currently about a third of travel insurance is sold as part of a package.

By putting package travel insurance under the regulation of the FSA, travelers who buy the insurance will be protected by requirements that the insurance providers must operate with due skill and diligence and must treat their customers fairly. If consumers are not satisfied with their purchase, they will have recourse to the Financial Ombudsman Service. According to Treasury Minister Ed Balls, regulated companies have been shown to be better at outlining features and exclusions in policies than are companies which are not regulated. This is important as travel insurance is considered to be more complicated than home or automobile insurance.

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