Travel agents are gradually losing their grip on the travel insurance market, fresh statistics show.

Figures from the International Passenger Survey (IPS) and research company Mintel, all point towards a growing foreign travel market in which travel agents are losing ground to cheaper travel insurance companies.

It follows regulations in November 1998 that prevented travel agents linking holiday discounts to compulsory purchase of their own insurance cover.

The industry was heavily criticised for charging up to 50% commission for arranging cover.

Mintel's figures show travel agents have lost 6% of the market in two years and now supply 64% of the UK's travel insurance.

Club Direct travel writers have capitalised on the shift the most, by increasing their market share from 10% to 14%.

Meanwhile, IPS figures show the number of foreign trips from the UK has grown from 46 million in 1997 to 54 million in 1999.

“We expect this pressure on travel agents to continue, with a consequent downward influence on average insurance rates across the market,” said Club Direct managing director Brent Escott.