The ABI has warned that excluding insurance sold by travel agents from FSA regulation could lead to uncertainty for millions of consumers.
Responding to the Treasury's consultation document, Regulating Insurance Mediation, the ABI warned that an inconsistent approach among market sectors would disadvantage customers and threaten competition.
ABI director general Mary Francis said: "While we would have preferred that the regulation of general insurance remained outside the statutory framework, we want to ensure that the new regime will work. To do this it must provide adequate and consistent levels of consumer protection, while supporting genuine competition.
"More than 12 million people a year buy travel insurance through travel agents and tour operators. Excluding these sales from regulation would lead to confusion for customers.
"It would also lead to higher compliance costs for regulated providers, so encouraging unregulated sales. This distortion could lead to reduced choice for consumers."
