Treasury Announces Investigation Of Travel Insurance Mis-Selling

By and large, Brits are a conservative consumer group.  As such, millions of us will gladly pay a relatively small premium to take-out a travel insurance policy before we go away on our holidays.  If you happen to have been one of the millions of Britons who have also experienced the reality of trying to claim on a travel insurance policy, only to find the insurance company worm its way out of the deal under one of the many exemptions, then you may well be delighted to hear that the Treasury has announced that it going to commence an investigation into the manner in which travel insurance is sold in the UK. 

Annually, we Brits spend over £1 billion a year on travel insurance premiums.  We do it because we believe we will be covered for almost all eventualities should something go wrong – either prior to the holiday itself or while on holiday.  In many cases, however, the harsh reality is that the numerous “get out” clauses that travel insurance policies customarily contain means the reality of being refunded, or even being compensated, for an event we thought was covered in our travel insurance is a far cry from what we may have been lead to understand when being sold the policy in the first place.

As such, of particular interest to the Treasury’s investigation will be the old gripe of whether or not travel insurances that are sold as part of a “holiday package” are being mis-sold.  While standalone insurance policies are regulated by the Financial Services Authority (FSA), travel insurance that is sold as part of a holiday package is not. 

Commenting on the current practice of possibly mis-selling travel insurance as part of a travel package, Economic Secretary Ed Balls said, “We need to find out whether travel insurance sold with a holiday is being mis-sold and if we need to educate consumers to consider the cover they want and ensure they are properly informed.”  This comes after Balls discovered that almost half of the UK’s 20 million annual travel insurance policies don’t cover terrorist attacks.

Although travel insurance policies sold by travel firms are not currently regulated, meaning that aggrieved policyholders have little or no right of redress against the travel firm, the announced forthcoming investigation by the Treasury may be just the wake-up call the industry needs to get its house in order or follow the fate of other financial service providers whose practices and activities have recently been curtailed following high profile investigations.

Tags: misselling, travel, Insurance, fsa, premium, uk