Travel insurance sold as part of a package should not be exempted from FSA regulation, according to the ABI and the Consumers' Association.
The ABI, Biba and the Consumers' Association expressed "considerable concern" at the Treasury's stance in a letter to the government yesterday.
Chief Secretary to the Treasury Paul Boateng revealed this month that travel insurance sold through travel agents as part of a package had been granted an exemption from new regulations due to come into force in January next year.
"The Treasury's decision not to include travel insurance sold as part of a package in the forthcoming statutory regime for regulating general insurance will act to the detriment of consumers," the letter said.
It continued: "It is not clear to what extent customers who buy travel insurance as part of a package will be protected at all.
"Insurers and brokers will have to bear the costs of regulation, but travel agents will not.
"This tilts the competitive advantage in favour of travel agents and is likely to lead to more insurance being sold without FSA regulation. This is a perverse outcome."
