Abta has lost its battle to continue regulating sales of travel insurance by members, who will have to comply with new Financial Services Authority regulations from January 2009.

The Treasury announced the change following a review of the current regime introduced in 2005. But Abta head of financial services Mike Monk believes the rules will be “light-touch”, allowing travel firms to go on selling insurance.

Monk expressed disappointment, but not surprise, saying. “We can’t object so long as [the regulation] is risk-based and proportionate. The Treasury was complimentary about Abta’s role and said it wants to work with us.”

The key issue will be the time it takes to explain the average policy to a client under the changed regime. If this takes considerably more than the current five to 10 minutes, many agents are likely to conclude the time would be better spent selling holidays – Abta fears that will mean more people travel uninsured.

“Inevitably some will stop selling insurance,” said Monk. “Our job is to minimise that. If it takes 30 minutes to do the paperwork and document a discussion, no one will do it.”

However, Monk does not believe agents will need to sit fresh exams. “This is more to do with how training is applied, with ensuring you communicate a summary of the main cover and explain about pre-existing medical conditions so consumers fully understand [a policy],” he said.

Details of the replacement system have yet to be drawn up. A three-month consultation on the detail began this week and will conclude on September 18.

In a statement, the Treasury said the change would “minimise the burden on travel firms that become FSA authorised”.

Firms that opt out of FSA authorisation might still sell insurance by becoming an appointed representative of an FSA-regulated company. Failing that, they could introduce customers to an insurer or broker in return for a commission or fee.

Read the current FSA regulations on selling travel insurance.