Regulation sets out final rules for travel insurance sold with holidays.
The Financial Services Authority (FSA) has published a policy statement setting out the final rules for regulating travel insurance sold alongside a holiday, which is known as connected travel insurance (CTI).
The new regime will come into force on 1 January and the FSA will start to accept authorisation applications for the new CTI activities from 30 June.
Dan Waters, director of retail policy and themes at the FSA, said: "Regulation is only seven months away and firms need to make sure they are fully prepared. We start accepting applications next month and firms are advised to apply early to ensure that they are ready in good time for the start of the new regulation next January. Our rules are designed to put in place a proportionate, risk-based regulatory regime for these sales of travel insurance, securing protection for customers."
Peter Gerrard, head of insurance research at moneysupermarket.com, said: “The regulation of travel insurance sold by travel agents and holiday providers has long been overdue so this is positive news for the industry. As of January, this rule will put an end to the ridiculous situation where part of the travel insurance market was regulated and the rest wasn’t.
"Some travel agents have been known to add on insurance policies at the time of booking without checking the eligibility of the customer. This has meant holidaymakers with pre-existing medical conditions or those falling outside the age criteria buying policies that don’t cover them – resulting in any claim being ineligible."
He added: "Insurance sold with a holiday is often up to three times more costly than a standalone policy, so holidaymakers should shop around for the right level of cover at the right price."
