18-07-03

Treasury must reverse decision over travel insurance – Barrett

John Barrett, Scottish Liberal Democrat MP for Edinburgh West, has used the last House of Commons debate before the summer recess to call on the Government to introduce greater consumer protection on the issue of travel insurance.
       
Following a lengthy inquiry, the Government announced that it would bring the sale of general insurance within the regulation of the Financial Services Authority.  This would give those with genuine complaints access to the Financial Ombudsman.  However, the sale of travel insurance as part of a package by tour operators or travel agents was made exempt.

The decision has been condemned by many involved in the industry such as the Association of British Insurers as well as by consumer watchdogs, including the Consumers' Association.

It could leave many of the 13.5 million people who will go abroad on their summer holidays in the next two months with the risk of high medical bills.

In a statement, John Barrett said:

"58% of all travel insurance in the UK is sold either by a travel agent or tour operator.  That is why the Government's decision to exempt insurance sold this way from regulation is so ridiculous.

"Treasury Ministers say there is no evidence of travel insurance misselling.  However a study carried out by the Consumers Association found that those buying insurance from a travel agent or tour operator were twice as likely to be dissatisfied if they had to make a claim.

"All too often, the details of travel insurance, such as pre-existing medical conditions not being covered, are not properly explained.   This leaves holidaymakers jetting off on their holiday, under the impression they have all the necessary insurance, when in fact the opposite could be the case.  Phrases such as 'unlimited cover' used in advertising also lures people into a false sense of security.

"The Association of British Insurers argues that the Government's decision will be to the detriment of consumers.  This is why the Treasury must reverse this policy and ensure nobody is landed with large medical bills whilst on holiday because of the inadequate insurance sold to them."

ENDS

Notes to Editors

1. Information from the Association of British Insurers can be found at http://www.abi.org.uk/newsreleases/viewNewsRelease.asp?nrid=691

2. More information from the Consumers Association can be found at http://www.which.net/media/pr/oct02/general/treasury.html

3. The Chief Secretary to the Treasury, Paul Boateng, said in a written statement to the House of Commons

"Following extensive consultation the government has decided not to regulate travel insurance sold with a holiday. The consultation provided insufficient evidence of consumer detriment to warrant the extra costs of regulation, particularly for small independent travel agents.

"However I recognise that there are concerns about this market. The Treasury will therefore hold a review of this decision two years after implementation of general insurance regulation in early 2007."