FSA to Regulate Travel Insurance

by Gill Montia

Story link: FSA to Regulate Travel Insurance

New Government plans will give the Financial Services Authority (FSA) responsibility for regulating the sale of travel insurance that is purchased alongside a holiday. Currently the FSA only regulates travel insurance not sold as part of a holiday package and the move will give consumers the statutory protection afforded by FSA regulation.

Once the authority takes up its additional role, businesses selling travel insurance in connection with a holiday will be bound by the FSA’s principles. These include the requirement to conduct business with due skill, care and diligence, and the need to treat customers fairly. Where problems arise, consumers will have access to the Financial Ombudsman Service.

For those travel companies choosing not to seek FSA authorisation, travel insurance will have to be sold through an appointed representative. That is to say the firm will be able to sell travel insurance on behalf of a company regulated by the FSA. Under the Government’s plans, travel agents will also be allowed to provide information on insurance on a commission basis, although consultations are taking place regarding these concessions, which are intended to give some businesses a means of continuing to offer insurance services to their customers.

The Treasury plans to implement the new structure gradually, to allow the FSA and the industry to adapt. The new measures are partly in response to research that shows consumers making less informed choices when purchasing travel insurance than other insurance products.