Other writers now facing the heat as Biba applauds insurer's action

AIG Europe (UK) has given its partners the green light to remove terrorism exclusions from their travel policies, putting pressure on other direct writers to follow suit.

The move follows criticisms earlier this year from Biba over the market-wide practice of applying blanket terrorism exclusions. The practice would leave travellers caught up in attacks like those in Bali facing massive medical and repatriation bills.

AIG Europe underwrites policies for some of the major players in the travel industry including Boots, InsureandGo, Argos, Virgin, E-bookers, Flybe and Opodo.

Jon Cooper, vice president of travel at AIG Europe (UK), said: "Travel insurance policies commonly exclude terrorism, but with terrorist attacks becoming a more present danger throughout the world, AIG Europe recognises that UK travellers now need policies that will cover them if the worst happens.

"Following this move, our partners who opt to remove the exclusion can be assured that their policyholder claims will be honoured in the event of terrorist attacks."

InsureandGo said it will remove the terror exclusion from its policies.

According to the US state department, the number of terrorist attacks worldwide has increased by 274% from 175 in 2003 to 655 last year.

A spokesman for Direct Line said the insurer had no immediate plans to follow suit, but claimed the company would continue to use discretion when looking at terrorism-related claims.

Graeme Trudgill, Biba's technical services manager, said: "We applaud the fact that the market is starting to respond to our concerns.

"We are sure that the decision by direct writers will not impact upon the take-up of Biba's policy, which remains far more comprehensive."