The deadline on the consultation period for the Treasury's review of the sale of travel insurance passed yesterday with absolutely no new light being shed on the subject.
Just about all the submissions were as predictable as they come and could have been written anytime in the last five years.
To sum up: The Association of British Travel Agents (ABTA) has stuck its head in its members' balance sheets and realised that they cream off too much commission for mis-selling travel insurance for it to risk even the most minimal acknowledgement that there might be a problem; on the other side, brokers and direct insurers are united in their condemnation of the shabby sales practices of most travel agents and the poor value of the policies they sell. Powerful backing for the latter viewpoint comes from a range of consumer groups, most recently reinforced by BBCTV's Watchdog programme. This demonstrated, yet again, that too many people go through unnecessary hardship and suffering because they were not sold the right travel insurance policy by a travel agent.
So, if nothing has changed in the view of the market participants what chance is there that the Treasury will now stand up to the mighty travel industry lobby and do what it should have done in the first place which is get the Financial Services Authoirty to regulate all sales of travel insurance?
I suppose the most optimistic sign is the mere fact that the review is taking place. It was initiated by new Treasury minister Ed Balls who, as I have pointed out before, shows a greater understanding of the insurance industry than most of his recent predecessors put together. In speeches I have heard him make he has given the strongest hint possible that his belief is that there is a problem with travel insurance which wasn't solved by ABTA's worthless promises about addressing the problem with rigourous self regulation. He is unlikley to be impressed by ABTA's submission which seems just a re-run of previous arguments.
The one that always srtikes me as the most specious is that proper regulation will lead to a lack of consumer choice. I think this is the complete opposite of the real effect of introducing a level playing field as, at the moment, people almost feel obliged to buy the insurance through the travel agent or tour operator – it is virtually a linked with no choice offered. This means they do not have the incentive to shop around for something better and, also, that the alternative providers know that a large chunk of the potential market is cut off from them, reducing their incentive to market to them. Put everyone in the same regulatory environment and I believe that alongside the major benefit of eliminating alot of mis-selling we will also see greater consumer choice.
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