Government proposal for £1 levy on travel premiums dismissed

The insurance industry has dismissed government proposals to increase travel insurance premiums to compensate victims of terrorist attacks outside the UK.

As part of a Home Office consultation on the Criminal Injuries Compensation Scheme, a £1 levy could be added to travel insurance policies, which would be transferred to a central compensation fund.

Currently, if someone is injured abroad they are not eligible for compensation through UK schemes.

The same also applies to relatives or dependants of someone killed outside the UK.

But the idea of adding an additional charge has been rejected by the ABI.

An ABI spokesman said: "Firstly, policyholders already pay one levy - insurance premium tax - so we don't see why they should face another.

"Secondly, anything which adds to the cost of travel insurance, we believe will lead to more people travelling without the relevant insurance."

The ABI also dismissed the idea of increasing the scope of travel insurance cover to include injuries sustained through terrorist attack.

It said that an increasing number of insurers already offered suitable policy wording at the request of individual clients.

John Cooper, head of travel at AIG, said: "It's right that as a market that we should reflect the needs of today and customers should be able to cover themselves against those sorts of events."

But he added: "I don't think it needs a Government-backed levy in travel insurance terms when it is something that the market can contain itself."

The CICS provides payment at public expense to "blameless" victims of crimes of violence and operates in England, Wales and Scotland.