Treasury Select Committee slams exclusions buried in policy small print

The ABI and the Association of British Travel Agents (Abta) have rejected calls by an influential parliamentary committee for a crackdown on the travel sector.

The Treasury Select Committee slammed travel agents for failing to ensure policyholders are covered for medical expenses, in the event of terrorist attacks abroad - putting further pressure on the government to regulate the sale of travel insurance by travel agents and tour operators.

Committee chairman John McFall said: "There are huge numbers of people, millions literally, who have been sold, or are at risk of being sold, policies which do not meet their needs.

"All too often exclusions are buried in the small print of policies. Holiday-makers are risking damage to their health, or considerable financial loss, if they require treatment while abroad."

The ABI waded into the debate by rejecting the findings of the committee.

It called on the government to introduce "light touch" regulation through trading standards as FSA regulation was "too burdensome".

It argued that the Financial Ombudsman Service should be extended to cover customer disputes arising from travel insurance sold as part of travel package arrangements.

ABI director of general insurance Nick Starling said: "The committee implies that terrorism cover should be made compulsory.

"Over half of all travel insurance policies already cover the cost of medical treatment following a terrorist attack."

The UK travel insurance market was highly competitive and there was only a low risk of customers getting the wrong deal, the ABI said.

"We believe that regulation through trading standards would provide sound protection for consumers without imposing unnecessary burdens on travel agents or the FSA."

Abta, which has been campaigning heavily against regulation, also rejected the committee's findings.

It said the frequency of complaints remained low.

But consumer group Which? said its research showed consumers were being mis-sold travel insurance.

Biba said last week its research had uncovered significant abuses in the travel agent and tour operator market.

It called on the Treasury to introduce legislation to the sector.

The Treasury's consultation on the issue closed last week and a decision is expected to be announced ahead of the summer break.