The insurance ombudsman has backed The Association of British Travel Agents' (ABTA) stance in the dispute between Whiteley Insurance Consultants and the Dr Holiday travel group.
The row erupted after it was found that Scottish-based Dr Holiday had sold travel insurance policies even though its deal with Kingfisher Travel Insurance - the brand name of Whiteley - had terminated on 31 December.
Dr Holiday is owned by Strathmore Travel Group.
Though Kingfisher had told Dr Holiday to stop selling policies, ABTA said underwriters were obliged to honour policies sold after 31 December.
An ABTA spokesman confirmed this week that the insurance ombudsman had agreed with ABTA's stance in the dispute.
Strathmore liquidators Milne Craig Corson confirmed that though Kingfisher had withdrawn its cover on 31 December, Dr Holiday continued to sell policies after that date.
Whiteley Insurance Consultants was unavailable for comment at the time that Insurance Times went to press.