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Trade voices concern over insurance regulation
Concerns that more people will travel abroad without travel insurance after the extension of regulation by the Financial Services Authority have been highlighted.
The results from a TravelMole online survey, commissioned by leading insurance company AIG UK, reveal that agents and operators believe some companies will stop selling travel insurance altogether and others will reduce their focus on what used to be a key revenue earner.
The FSA will start regulating travel insurance sales through agents and operators from January 2009, but despite the imminence of the new regulation 19% of respondents are unaware that the change is coming.
Sixty seven per cent of expected to become “appointed representatives†or “introducers†of business for insurance companies, but 19% expected not to sell or give up selling insurance.
Not one expected to apply to the FSA to be regulated directly, with one respondent commenting: “The principle of regulation is a good thing for consumer confidence. However, the paperwork and processes are a civil servant’s joy and a sensible person’s nightmareâ€.
Travel insurance companies are expected to limit the number of agents and operators offered appointed representative status, due to the liabilities they will face for the activities of these agents and operators.
Although many agents and operators will become introducers 57% of respondents aware of the regulatory change expected their insurance revenue to fall and 25% expected redundancies in their company as a result of the new regulation.
The survey also found that:
*80% expected fewer agents and operators to sell insurance;
*74% felt fewer customers would buy insurance through the trade;
*70% felt the cost of policies would increase because of regulation.
Worryingly, of those respondents who felt the cost of insurance will increase, more than 94% expected that if customers were not offered insurance when buying a holiday or travel arrangement, they were less likely to buy it at all and may well travel without any protection.
If this scenario plays out in reality, it will clash with the spirit of regulation which is to ensure consumers purchase the right level of cover when travelling abroad.
by Phil Davies
Phil Davies
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