Only four travel firms have applied for authorisation by the Financial Services Authority to sell travel insurance from January 2 and there is no indication how many may stop selling insurance as a result.
The deadline for applications is November 14.
The FSA will regulate all travel insurance sales from the start of 2009, replacing the existing regime that allows travel association ABTA to oversee its members’ sales of insurance.
The change means consumers will no longer be able to buy insurance when they purchase a holiday unless their high-street agent, tour operator or online retailer acts as the appointed representative of an insurer or insurance broker.
No one at the FSA or ABTA knows how many retailers and tour operators will have appointed-representative status, but ABTA expects most brokers and insurers to limit the number of firms they appoint to five – as more brings an added regulatory burden.
Travel agents can also act as introducer-appointed representatives and direct customers to a broker or insurance company as part of a commercial relationship. But again, ABTA has no idea how many members have chosen this route. Otherwise, agents will be able to do no more than recommend clients obtain insurance.
ABTA head of financial services Mike Monk believes more people will travel without insurance as a consequence.
He warned: “About 19% of trips are not insured and it can only go one way if people cannot buy travel insurance at the point of sale of a holiday.”
FSA team leader for permissions David Farrow told a World Travel Market seminar on insurance: “It is a criminal offence to be dealing in insurance if you are not authorised.”
* More WTM 2008 coverage at travelweekly.co.uk/wtm2008