Travel insurers have written to the Financial Services Authority (FSA) about the underwriting arrangements of Yorkshire broker Whiteley Insurance Consultants.

The senior industry source said the broker had been selling its Kingfisher travel insurance policies to customers since December 2000, without having cover for them. “The fact of the matter is we knew since last December that Whiteley did not have an insurer and this was a cause of some concern,” he said.

Whiteley has denied the allegations. It said it had just signed a “retrospective” deal with American International Group (AIG), backdated to last year.

Whiteley said: “Up until October 2000, Whiteley had in place a panel of major, recognised insurers to underwrite the scheme. AIG has agreed to underwrite the Kingfisher Travel Insurance scheme, retrospectively from November 1, 2000 to October 31, 2001.”

Allianz Cornhill confirmed it was underwriting Whiteley until October 2000.

AIG has refused to comment on the move.

British Insurance Brokers' Association (Biba) chief executive Mike Williams said the arrangement was extremely unusual.

“I have never come across a deal where a whole group of travel insurance policies would have cover backdated,” he said.

“Some questions remain unanswered, such as who was providing cover for travellers before the deal was signed and what would have happened if one had had a medical emergency and needed to be repatriated.”