Travel firms misleading people on insurance

A quarter of holiday firms selling travel insurance have failed to meet new rules and are leaving travellers at risk of getting a poor deal.

New research has shown a significant number of companies are not meeting watchdog rules for selling travel cover and thereby misleading consumers and even acting illegally.

A major problem uncovered is that many firms are not scouring the whole of the market for the best insurance deals available, and failing to declare this fact as they should.

A study of websites advertising, arranging or selling travel found that despite the introduction of new regulations on 1 January, more than 25% of travel companies, are still not compliant with the Financial Services Authority's (FSA) rules for selling travel insurance.

Martin Rothwell, of World First Travel Insurance, who conducted the survey, said: 'It has been three months since the new regulations came into place, and still over a quarter of businesses are falling foul of them.'

World First Travel Insurance, reviewed 400 groups, comprising of both travel agents and domestic tourism operators and measured them against the FSA's regulations - it concluded that one-in-four were left wanting.

One of the most common problems uncovered in the research, was that unregulated travel businesses were continuing to advertise travel insurance, 'recommending' or 'advising' specific insurers - something which they are now, not permitted to do.

Another very common problem that the study unearthed was that 'appointed representatives' – sales people representing perhaps one or just a limited number of insurers - are omitting to display this fact, thereby misleading consumers, who may be thinking that they are being offered the best deal on the market, which is unlikely to be the case.

Holiday firms recommended deals on travel insurance often prove more costly than independently purchased cover and many are not comparing the market to find the best deal.

In addition, some operators are continuing to state that insurance can be arranged for clients and are including details of cover and premiums, even though they don't have the capacity and authorisation to do so.

Rothwell added: 'They need to realise that if they don't make the changes they are in contravention of FSA rules and this could have real consequences.

'Agents and domestic operators must review the content of their websites urgently and take remedial action to amend their travel insurance wordings, including wording on their booking forms.'

Since the start of the year, the selling of travel insurance by travel agents, tour operators and other sectors of the travel industry has been regulated by the FSA. The travel industry up until January had an exemption when insurance was sold alongside a travel or holiday booking. Now however they have to be completely transparent in regards to their capacity to sell and advertise insurance products.