New travel insurance rules

Consumers are to have more protection when buying travel insurance from travel agents.

New regulations from the Financial Services Authority (FSA) will see travel agents needing authorisation from the watchdog for selling insurance.

Currently travel agents were able to sell insurance without authorisation as long as policies were bundled with holidays.

However, this practise has led to claims insurance polices, what they cover and their exclusions were not fully explained to holidaymakers. Also people did not have the same rights when complaining.

Under the new rules travel agencies selling insurance will have to have staff trained in selling insurance.

Also consumers will get clear, concise and consistent information about a firm's services and products on offer so they can make informed choices; and if things go wrong, consumers are able to obtain redress.

Dan Waters, director of retail policy at the FSA, said: "Regulation is only seven months away and firms need to make sure they are fully prepared. We start accepting applications next month and firms are advised to apply early to ensure that they are ready in good time for the start of the new regulation next January.

"Our rules are designed to put in place a proportionate, risk-based regulatory regime for these sales of travel insurance, securing protection for customers."

Kelly Ostler-Coyle, at the Association of British Insurers (ABI), explained the new system brought in a level playing field – so consumers can truly compare insurance across the travel agents and direct from insurance companies.

"People can expect the same levels of service," she said.

"It creates a level playing field with the same levels of administration. It is also about having the same right to complain."

Under the new rules promotions for insurance need to be "fair, clear and not misleading" and consumer must be treated fairly before and after sale.

Minimum standards for complaint handling will also be introduced as well as independent arrangements to review and settle any complaints at no cost to consumers.

Mark Nancarrow, executive director of financial services at Thomas Cook, said: “Thomas Cook has a well-known and trusted brand name. We have been selling travel insurance to our customers for decades and have thousands of regular customers.

"We have now made changes that allow us to offer our exceptional cover at even better prices. So customers can be completely confident that they are getting the best possible protection from Thomas Cook.”

Thomas Cook is also now looking at expanding into other financial products beyond insurance.

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